Is This Beaten-Down Utility a Buy?

There’s one question I try to answer with any beaten-down stock: Is this a good company with temporary, solvable issues?

In the case of a company such as PG&E Corp. (PCG), the answer was… not really. The California utility looked cheap and interesting after a handful of horrible California wildfires a few years ago. Ultimately, the legal environment (and a messy balance sheet) made the setup unattractive. Today, the stock trades at the same price it did in 1983. Ouch.

On the flip side, there’s Vistra Corp. (VST), a utility company I first introduced to Smart Money Monday readers because of its unique setup in July 2021.

Vistra’s stock got whacked following a vicious winter storm in Texas. The storm was so bad it got its own name, Winter Storm Uri, and Vistra’s stock got hit due to a multibillion-dollar charge related to the storm. However, it has come out of it stronger and has repurchased gobs of stock. And it announced a transformative deal earlier this year, which I wrote about here in March.

Vistra is a stock I still hold today, but this week, we’re looking at another utilities player… and this one is really quite interesting.