BBAE Debate: IPP Stocks like Talen Energy (NYSE: $TLN): Hot or Not?
Will FERC’s recent adverse ruling in the Talen Energy (NYSE: $TLN) / Amazon (Nasdaq: $AMZN) data center deal derail the strong performance of independent power producer (IPP) stocks like Talen, Constellation Energy (NYSE: $CEG) and Vistra (NYSE: $VST)?
For a bull-vs.-bear debate, I’m joined by two guests in this video: Enrique Abeyta of HX Research and Travis Miller of Morningstar.
“I think Microsoft is paying $100 and Amazon is paying $75 [forward prices per megawatt hour; both far above current market prices] because they know prices are going to $150 … I think Talen doesn’t last 18 months before it gets bought out.”
Enrique says that the Federal Energy Regulatory Commission’s rejection of Talen’s request to up its “behind the meter” power delivery to Amazon’s co-located data center isn’t the precedent-setting move it may appear to be, and that Talen – whose stock has risen from $60-something when Enrique first flagged it to $192 as I type – and other IPPs will continue apace because FERC was more buying time to consider a new issue than outright rejecting a concept in perpetuity.
Enrique is bullish on IPPs.
“There were a lot of spurious arguments on both sides… PJM and FERC don’t really know what to do.”
Travis, quoted above, is bearish on IPPs and felt the FERC case stunk of showmanship.
The weird part? They both seem bearish for the longer term on IPPs. Enrique thinks that investors can make a lot of money in the short to medium term first, though.
Click here or the image below to watch our chat.
This article is for informational purposes only and is neither investment advice nor a solicitation to buy or sell securities. All investment involves inherent risks, including the total loss of principal, and past performance is not a guarantee of future results. Always conduct thorough research or consult with a financial expert before making any investment decisions. Neither the author nor BBAE has a position in any investment mentioned.
