NRG Energy (NRG) is the best-performing stock in the S&P 500 (^GSPC) so far in 2025. Catalysts host Julie Hyman and Great Hill Capital chairman and managing member Thomas Hayes take a closer look at the stock's moves and discuss some alternative plays.

To watch more expert insights and analysis on the latest market action, check out more Catalysts here.

Video Transcript

00:00 Speaker A

Another stock that we are watching, it's the best performing stock in the S&P 500 this year. Might be a little bit of a surprise, it's NRG Energy. It's up about 71% this year. It announced, recently announced a $12 billion deal to acquire a fleet of natural gas fired plants from LS for about 12 billion, as we said including debt, betting the fuel will be crucial to meet electricity demand from data centers. NRG is a Houston based power producer. It's already been a key beneficiary of the AI driven boom in the US power system. Now it's vying to take a bigger share of that growth. Um, so basically what we're seeing here is this big increase in NRG, this expansion. Energy already owns gas fired generation. It also owns solar and and other types of renewable generation here. And the the changing sort of Tom Hastall with me, obviously. The changing face of what energy generation looks like in the United States has been really interesting as we've seen it powered by this data center boom.

02:07 Tom Hastall

Yeah, I think NRG is interesting. It's a great business. You've seen the stock go up quite a bit. But the problem is, they rely on the kindness of strangers. They have to go to the regulators every year and beg them for pricing increases. That's the bad news. They've got to make all this investment in the face of not knowing what those price increases are going to be. However, they're going to they're going to boom from those. They're going to continue to boom, but that the run is already priced in a lot of that good news.

02:46 Speaker A

Yes, but the difference with the rates is when they make those sort of out of, you know, they make the side deals with the data center operators, like we've seen to some extent right Microsoft made the deal to reopen the reactor at Three Mile Island. But, you know, so I think that's what they and investors are banking on.

03:18 Tom Hastall

I think so. I'd rather play the feed stock. I always try to play the arms dealers, not the warring factions. So for me, I'd rather play natural gas companies that have been left for dead, like Comstock Resources. Jerry Jones owns 71% of the stock. They've got the Haynesville Shale. And by the way, not only are you going to benefit from the unlimited demand from the data centers and from the utilities for that natural gas, but guess what the EU trade deals are going to all all be about with the tariffs. It's all going to be, you take our natural gas, we will lower your tariffs. They're in the Haynesville Shale, which is right right there where they can ship. So, uh so that's a good way to play. We started coming out on that aggressively at eight and nine dollars. It's $23. We think you can double again from here. Why is that? Well, uh they have to report to the SEC, uh all energy companies PV10, proven reserve for 10 years. What they don't report is they've got 15 excess years of drilling that's not in the price of the stock, which is probably double plus from here. So we think this has a long runway driven by the AI theme. So when people say, "What are your AI investments?" I say, "Well, Alibaba, it's a derivative play, and I say Comstock Resources." And people say, "What do you mean?" I say, "Natural gas." And that's the story. And NRG is going to be an equal beneficiary for sure.

05:18 Speaker A

Right. Interesting. Thanks, Tom. Appreciate it.  Related Videos

01:08

What comes next for the US dollar as Korean won gains advantage?

Yahoo Finance Video • 22 hours ago 45:04

Trump's deals in the Mideast, retail tariffs, tax bill: Catalysts

Yahoo Finance Video • 22 hours ago 01:03

Retail gains, Wayfair upgrade, NRG Energy $12 billion deal

Yahoo Finance Video • 2 days ago 01:18

Trump Says India Willing to Charge No Tariff on US Goods

Bloomberg • 6 hours ago

View Comments