This Energy Stock Is Crushing the S&P 500 in 2025, and Shows No Signs of Stopping

Key Points

• Vistra is a competitive electricity generator with a soaring stock price.

• A renewed emphasis on nuclear power should benefit Vistra and its large nuclear portfolio.

• Rising demand is causing electricity rates to rise, which helps Vistra's bottom line.

• 10 stocks we like better than Vistra ›

It's rare for a well-established energy stock to absolutely pulverize the S&P 500's returns, but that's exactly what Texas-based electric company Vistra (NYSE: VST) is doing. The stock is up 47.5% so far in 2025, beating the S&P's 12.8% return by nearly 35 percentage points.

And Vistra doesn't show any signs of stopping, thanks to two big trends that both happen to be working in its favor. Here's why Vistra is likely to continue to outpace the market.

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Nuclear: The fuel everyone can agree on

In 1979, Reactor No. 2 at the Three Mile Island nuclear power plant in Pennsylvania suffered a partial meltdown in the worst U.S. nuclear disaster in history. In the wake of the disaster, "No Nukes!" became a national rallying cry that spurred the country into investigating safer forms of clean power generation. Indeed, the country hasn't opened a new nuclear facility since 1996.

Today, however, nuclear power is in vogue. Environmentalists aren't necessarily happy about it, but they generally prefer it to greenhouse gas-emitting fossil fuel power plants, and conservatives generally prefer it to newer green technologies like solar and wind power. Although the majority (54%) of the electricity Vistra generates comes from natural gas, 26% comes from its four nuclear power plants. That may not sound like a large portfolio, but it's the second-largest competitive nuclear power fleet in the U.S.

Nuclear power is not only relatively cheap to produce once a reactor is up and running, but also qualifies for federal tax credits that seem unlikely to be phased out by the nuclear-friendly Trump administration. The tax credit it received gave Vistra a $545 million boost to its adjusted EBITDA in 2024, and gives the company a leg up on competitors with no nuclear assets.

Image source: Getty Images.

Rising rates

As a competitive electricity provider -- as opposed to a regulated utility -- Vistra sells the electricity it generates on the open market. It can sell it directly to retail customers, or wholesale to utilities, or even to other competitive electricity providers to augment their generation portfolios. Under most circumstances, that would make Vistra a pretty unexciting company. But not right now.

Right now, we're in the midst of a sudden uptrend in U.S. electricity demand, caused by a number of factors, including the boom in power-hungry data centers and artificial intelligence (AI) computing. Because electricity supply is limited, and new capacity takes years to bring online, electricity rates are already surging and are projected to continue to do so over the near term. Recent cancellations of major solar and wind projects could make things worse by keeping supply growth lower than previously anticipated.

That adds up to more demand for Vistra's electricity at potentially higher rates, which is why the company's shares have surged this year.

Room to grow

Of course, more electricity demand doesn't help a power generator if it's already operating at maximum capacity. Luckily, Vistra has plenty of room to increase its output.

Vistra's nuclear plants were the only part of its generation portfolio operating at or near peak capacity in its most recent quarter. Its natural gas and coal-fired power plants were operating at 63% or less of their capacity overall. If market electricity prices continue to rise, Vistra is likely to be able to increase its output to take advantage. That should help power ongoing share price gains.

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John Bromels has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.