A "Texas-Sized" Overreaction As I'm sure you are aware, the "Great Texas Blackout" of February 2021 was one of the worst blackouts in U.S. history. Residents went without power and potable water for several days. It was a once-in-100-years event. More than 3,000 daily low temperature records were set as a deep freeze covered the United States. Vistra Corp. (NYSE: VST) - a utility that provides and distributes electricity, mainly to the Texas market - was directly impacted. The company has told investors that it will take a one-time loss in the range of $900 million to $1.3 billion because of the historic blackouts. That isn't good news - but Vistra has more than enough balance sheet strength to handle it. Compared with the size of the loss, the stock market reaction to the news has been far overdone. This one-time loss of roughly $1 billion has taken almost $3 billion off Vistra's stock market capitalization. But here's where it gets really interesting... There is a very good chance that Vistra and other large utilities in the Texas power market will actually benefit from this disaster. There are smaller utilities that are now in severe financial distress, and Vistra is likely going to pick up a significant number of retail customers from those weaker utilities. This is an opportunity. I think that Vistra's shares were very attractively priced even before market took the stock out to the woodshed. At Vistra's current $8.13 billion market valuation, investors are buying a company that has been regularly generating more than $2 billion of free cash flow - and in 2020, it generated $2.5 billion. This is cash that is available to pay to shareholders as dividends, use for share repurchases, invest in earnings growth or strengthen the corporate balance sheet. Vistra is so cheap, it could use that $2.5 billion of free cash flow to repurchase every single share outstanding in less than four years. It could also pay out the entire $2.5 billion of free cash flow as a dividend and create a 31.25% yield for shareholders. Using past takeover transactions where utility providers similar to Vistra have been acquired as a metric puts the fair value of Vistra's shares at more than $32. That is almost twice the current share price. As Vistra grows earnings over the next decade and continues investing in renewables, I believe that $32 fair value price is going to move even higher. With a nice and growing 3.5% dividend yield, this one is poised for long-term growth. Good investing, Jody | 
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