In the wake of Hurricane Ida, hundreds of thousands of people across the southern U.S. were left without power. However, some were able to stay on the grid thanks to the help of in-home generators.
Hurricane season is a great reminder of why generators are so important, especially as natural disasters are on the rise across the country. From wildfires out in California to hurricanes in Louisiana, generators are vital for homes as the nation’s power grid gets even more vulnerable and archaic.
One of my fundamentally superior stocks has been seeing the effects of this phenomena in the past week, as it hit a new all-time high of $458.10 after soaring over 12% on Monday. The company is Generac Holdings, Inc. (GNRC), and they not only makes high-quality generators, but also have tapped into the solar business as well.
Generac Holdings 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 Holding Corporation (SHLDQ), 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. 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.
More and more Californians are rushing to install either Generac’s or Tesla’s backup power systems. But, given Generac’s vast dealer network, I look for Generac to beat Tesla.
It’s second quarter earnings were quite impressive due to its strong underlying fundamentals. Thanks to strong demand for its back-up power generators, Generac Holdings, Inc. posted exceptional results for its second quarter and upped its 2021 guidance.
For the second quarter, Generac achieved total sales of $920 million, or 68% year-over-year growth — a new record for the company. The analyst community was expecting total sales of $863.41 million. Residential sales accounted for $600 million, while commercial and industrial sales accounted for $245 million.
Generac also reported adjusted second-quarter earnings of $153 million, or $2.39 per share, up from $88 million, or $1.40 per share in the second quarter of 2020. These results also represented a new record for Generac. Analysts were looking for adjusted earnings of $2.31 per share, so Generac posted a 3.5% earnings surprise.
Looking forward, Generac expects production of its residential standby generators to ramp up along with increased demand for its PWRcell energy storage systems. As a result, the company increased its outlook for fiscal year 2021. Full-year sales are now expected to grow between 47% and 50%, up from previous estimates for 40% to 45% annual sales growth.
The Bottom Line
As more and more states move to adopt green energy, the switch from fossil fuels will result in a very unstable and inconsistent power grid. This equates to frequent brownouts and rolling blackouts.
This establishes a need for generators to protect against blackouts and a need for their PWRcell energy storage systems for brownouts. Generac Holdings has positioned itself perfectly to help the nation during the switch to green energy.
And the stock has exploded since I recommended it to my Growth Investor subscribers in August of 2020. SoI don’t expect its momentum to slow down anytime soon given the incredible growth expected in the sector.
I hand pick every stock on my Buy Lists, and it’s clear why I chose GNRC for its high growth potential. The bottom line is GNRC is the best play in the energy market.
In fact, I expect even more growth in the future as the company turns to solar. Generac currently has a B grade (Buy) on Portfolio Grader.
And if you’re looking for stocks in other exploding sectors of the economy to invest in, then look no further than my Growth Investor Buy List, which is chock full of high-quality stocks dominating their respective industries.
P.S. There’s a great divide opening up in America, and investing in my Growth Investor stocks will help get you on the right side of it. You see, on one side is a new aristocracy that’s amassing more wealth, more quickly than any other group in American history. For people like me, the one percent, life has never been better, more prosperous.
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What’s happening is only going to gather in strength over the coming decades. It certainly won’t weaken.
Few Americans even know that any of this is going on. I’ve never seen anyone from my side of the chasm step forward to explain any of these things.
It’s why I put together this video. In it, I’ll lay out exactly what is happening, including several key steps every American should take right now.
It doesn’t matter if you have $500 in savings or $5 million. You can benefit from the information in this video.
It’s free to watch and by doing so I know you’ll be ahead of everyone else struggling to understand what is really going on.
PPS: The InvestorPlace Media offices will be closed on Friday, September 3 and Monday, September 6 for the Labor Day holiday weekend.
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Generac Holdings, Inc. (GNRC)