Rising Power Outages Make Generac Stock Worth Buying Now

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  The average U.S. electricity customer lost power for more than eight hours in 2020. That’s up more than 100% from 2013.

        Alamy

In theory, record heat waves, Western wildfires, rolling blackouts, and hurricanes should be good news for generator maker

        Generac Holdings
      .

But its shares have been falling sharply this year, and that creates an opportunity for investors to pick up a growth stock at a value-stock price.

Waukesha, Wis.–based

        Generac

(ticker: GNRC) is the dominant name in residential standby power generation, with about three-quarters of the U.S. market. Those sales make up about half the company’s revenue, with the remainder coming from commercial and industrial customers, as well as from maintaining those generators.

Little wonder that

        Generac

is known as a storm stock. When superstorm Sandy hammered the Northeast in 2012, Generac’s sales shot up to $1.5 billion in 2013, nearly double what it was two years previously. From there, Generac just kept going. “Any event involving outages, including storms, blackouts, utility failure, whatever, drives increased awareness and therefore increased sales,” says Baird analyst Mike Halloran.

In some places, the company’s backup generators are considered necessities. Jonathan Skyrme of Trumbull, Conn., has a 10-kilowatt generator system that runs on propane, big enough to run most of his house in the event of an outage. Those aren’t uncommon in Skyrme’s rural neighborhood, where branches from old Norway maples seem to come down every time the wind blows. “I love the idea of my system,” he says. “It’s reassuring to know it’s there for the next major weather event.”

There’s more than just bad weather driving power outages these days. Wildfires in California can leave people…

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