In case you missed it, Volkswagen Group (VWAGY) held its “Power Day” on Monday and announced several exciting developments with their electric vehicle (EV) models.
During the event, Volkswagen focused on their efforts to reduce the cost of producing the batteries for their vehicles by up to 50%, which would make their EVs a more affordable option. This is in efforts to accelerate the shift away from gas-powered cars.
The company, which is the second-largest automaker in the world based on sales, also announced that they are going to build multiple battery factories around the world and greatly expand their network of charging stations.
Their ultimate goal, however, is to shift to solid-state battery technology, which has longer range and quicker charging times, and are the two largest hurdles for mass EV implementation.
Of course, Volkswagen’s “Power Day” is a response to Tesla, Inc. (TSLA)’s “Battery Day” held last year, which touched on many of the same topics, like battery improvements, charging and ways to make EV more affordable.
However, it seems that Volkswagen is now crushing Tesla in every category. While Tesla may have up to three gigafactories in conjunction with new manufacturing plants, VW is opening six gigafactories in Europe alone. VW is also intending to have more charging stations than Tesla in China and Europe, which will charge their EVs faster due to better cooling for their EVs.
While Tesla tends to make the headlines with their flash, VW Group already has more EV models than TSLA, and with their Audi and Porsche brands, now has 13 EV models that will soon expand to 25 in the coming years. I think this sets VW group on track to pass Tesla in worldwide EV sales by 2023.
The bottom line: VW is striving to beat Tesla by having substantially more models, faster charging, more gigafactories, more manufacturing plants and cheaper EVs as well as luxury EVs with solid-state batteries.
And based on VWAGY’s stock performance, investors are clearly excited. The stock soared more than 21% this week, while TSLA slipped more than 6.5%.
But don’t let me mislead you into thinking I am backing VWAGY – I have found a much better horse in the EV race.
My Pick for the Electric Vehicle Industry
It’s clear that the automobile industry is also slowly turning into a battery-making industry! While my pick for the industry may not be as flashy as TSLA or even Volkswagen, I believe it provides an even better opportunity.
I’m talking about Generac Holdings, Inc. (GNRC).
It was the first company to develop generators for home use back in 1959 in Wales, Wisconsin. Founder Robert Kern started the company with only five employees and his own personal generator designs. Thanks to a strategic, decades-long partnership with Sears, the company’s generators were marketed under the Craftsman brand well into the 1990s.
Today, Generac is the number-one manufacturer of home backup generators, which are now marketed under the Guardian brand. In addition to its home backup generators, the company also offers portable generators, pressure washers, water pumps, transfer switches and other parts and accessories.
Generac has also developed its own clean energy power storage system, PWRcell. The PWRcell stores energy from solar panels or the electric grid, ensuring that your home is never without power in rolling blackouts or other power outage situations. The system can provide up to 11 kilowatts of backup power.
Natural gas is now banned in all new residential construction in California, and solar is mandatory. But renewable energy has yet to replace the closed power plants’ output. In fact, California Governor Gavin Newsom admitted that, by shutting down big natural gas plants, the state was not fully prepared for the shift to alternative energy.
The state has approved a massive lithium battery storage facility in Moss Landing, and another is anticipated in Morro Bay. However, the acute shortage of lithium batteries has delayed the completion of these storage facilities, and, in turn, has strained California’s electric grid. The good news is that California’s power conundrum could accelerate the adoption of more home lithium battery packs, which is great news for GNRC.
So, more and more Californians are rushing to install either Generac’s or Tesla’s backup power systems. But, given Generac’s vast dealer network and strong fundamentals, expect Generac to beat Tesla. Just take a look at its latest earnings report.
Generac Holdings released record fourth-quarter results on February 11. Fourth-quarter sales jumped 29% year-over-year to $761 million, up from $591 million in the same quarter a year ago. Residential product sales accounted for $499 million, up from $323 million in the fourth quarter of 2019.
Generac Holdings also reported fourth-quarter adjusted earnings of $136 million, or $2.12 per share, compared to $97 million, or $1.53 per share, in the fourth quarter of 2019. The analyst community was expecting adjusted earnings of $1.96 per share on $731.23 million in sales, so GNRC posted an 8.2% earnings surprise and a 4.1% sales surprise.
For fiscal year 2020, Generac Holding achieved total sales of $2.5 billion, or 13% annual sales growth. Residential product sales grew 36% year-over-year to $1.56 billion. Full-year adjusted earnings came in at $412 million, or $6.47 per share, which represented 29.6% annual earnings growth. These results also topped forecasts for adjusted earnings of $6.31 per share and sales of $2.46 billion.
Looking forward, company management expects “2021 to be another very strong year given the significant momentum for our residential products and an expected return to growth for our C&I products.” As a result, Generac Holdings expects full-year sales growth between 25% and 30%.
GNRC is the perfect example of the type of growing company that investors will rotate to as Wall Street looks past the hype and focuses more on company fundamentals.
This is especially important as the first-quarter earnings season kicks off in mid-April. This will be another phenomenal earnings season, thanks to easy year-over-year comparisons. I look for GNRC to post another strong earnings quarter, as well as my Growth Investor Buy Lists stocks. They are chock full of fundamentally superior companies, and I expect investors to gravitate to my high-quality stocks and drive them higher as they post wave-after-wave of positive earnings.
If you want to get into position to ride the next earnings wave, please join me at Growth Investor today.
The Editor (Louis Navellier) hereby discloses that as of the date of this email, the Editor (Louis Navellier), directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
Generac Holdings, Inc. (GNRC)