A key resistance level has formed in the chart of Vistra Energy (VST). If this level is broken, a breakout could occur.
VST is one of the largest power producers and retail energy providers in the U.S. It owns and operates 39 gigawatts of nuclear, coal, and natural gas generation in its wholesale generation segment after acquiring Dynegy in 2018. Its retail electricity segment serves 5 million customers in 20 states.
The company was initially impacted at the beginning of the pandemic, but electricity demand soon ramped up in the fall. This allowed the company to reaffirm its strong guidance for 2021. Vistra is also planning for the future with its plan to shift into cleaner energy.
The company had $500 million in cash as of the end of the most recent quarter, compared with $752 million in short-term debt. Vista also has a 7.6% net profit margin. While growth has been down over the past year, sales are expected to inch up this quarter.
The stock is currently trading at a low multiple, with a P/E of 11.8, leading to a Value Grade of A in our POWR Ratings system.
While the stock is down over the past year, it has shown recent positive momentum.
Take a look at the 1-year chart of VST below with my added notations:
During the past eight months, VST has formed a key level of resistance at the $22 (red) mark. The stock has tested that level twice since its March low and is currently sitting right under that level again.
A solid close above $22 should lead to higher prices for VST. Therefore a long trade could be made on a breakthrough of that level.
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VST shares were trading at $21.12 per share on Friday morning, up $0.03 (+0.14%). Year-to-date, VST has gained 7.43%, versus a 3.69% rise in the benchmark S&P 500 index during the same period.
About the Author: Christian Tharp, CMT
Christian is an expert stock market coach at the Adam Mesh Trading Group who has mentored more than 4,000 traders and investors. He is a professional technical analyst that is a certified Chartered Market Technician (CMT), which is a designation awarded by the CMT Association. Christian is also the author of the daily online newsletter Todays Big Stock.
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