The Boring Stock Beating Nvidia (Nasdaq: NVDA) That No One Has Ever Heard Of

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Key Points:

• VST is the top-performing S&P 500 stock, outperforming Nvidia.
• Utility stocks are in demand due to reliable dividends and expected interest rate cuts.
• Consider smaller utility stocks or the utility index (XLE) for diversification.
• With the competition heating up for Nvidia, investors are already starting to look ahead to 2025’s best investments. See what the hype is all about here .

Doug and Lee discuss VST, the best-performing S&P 500 stock of the year, even outperforming Nvidia (NASDAQ: NVDA) . They highlight that VST is a utility company, part of a sector that has seen significant growth due to the increasing demand for electricity, driven by factors like AI and Bitcoin mining. The conversation touches on the steady demand for utilities, given their essential role in infrastructure, and the potential for continued growth as interest rates are expected to fall. They also suggest exploring alternative utility stocks, including smaller companies in the dividend aristocrats and dividend kings categories, as a way to diversify investments within the sector.

Watch the Video

https://videos.247wallst.com/247wallst.com/2024/09/The-Boring-Stock-Beating-Nvidia-Nasdaq_NVDA-That-No-One-Has-Ever-Heard-Of.mp4

Edited Video Transcript:

VST is the best-performing, uh, S&P five hundred stock this year, even better than, than Nvidia.

Yep.

Most people have not heard of it.

So, then I don't know much about it.

So tell me about it.

Well, they're extremely successful utility and utility stocks and the sector itself has been on a rampage this year and literally up over twenty percent for the utility index.

And for years, the only people buying utility stocks were widows, orphans, and people like that.

My parents when I was young, but the expansion of need for electricity is huge.

And they've all had a big year, whether it's Duke or Dominion or any of the energy, any of the big, they're all trading at fifty-two-week highs.

Wrote a recent piece about it, looking for yields still there.

And you know what?

They're going to continue to go higher.

Because interest rates are going to continue to fall.

And dividend-paying stocks, especially safe dividend stocks like utilities, because the product is always in demand.

There's a lot of products in this world you can do without, but electricity isn't one of them.

And as yields continue to fall, the...

Wall Street expects another fifty basis points this year, probably twenty-five in November and twenty-five in December.

They'll sit out October in front of the election and then another hundred basis points in twenty twenty-five.

And then perhaps even another cut in twenty twenty-six.

So Fed funds, which is now like four seventy-five to five, could it be three and a quarter to three or three to three and a quarter?

And these stocks like VST will be in big demand, Doug.

So the other thing that I tend to like about this industry, and you've already hinted at it, is that it doesn't go away.

It's like phone lines, railroad tracks, the interstate.

It's basically part of the American infrastructure.

And it's absolutely critical to whether you're a residential or a commercial client, you need electricity.

And we'll get into this down the road, but the demand for electricity is hockey-sticking because of how much electricity Bitcoin mining and AI takes.

So look, for those of you who like you, if you like this sector, there's one question you have to ask yourself.

If it is up more than any other stock in the S&P fund, does it still have a ways to run?

It's possible.

Some stocks like NVIDIA just keep going up.

Or should you look at an alternative stock that's in basically the same sector?

Well, and you can always buy the, I think it's the XLE, which is the utility index.

You can always buy that.

And also you can sift through and maybe look for smaller utilities like Black Hills and Northwest and, you know, ones like that that are actually in the dividend aristocrats and dividend kings because they paid dividends for fifty years.

Black Hills still yields over five percent at this level.

So maybe, you know, lower your sights from the, you know, from the VSTs and the constellations and the huge companies that consolidated in New York and look maybe at some of the smaller ones that we often feature on twenty-four seven Wall Street.

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