Since 1959, Generac Holdings (GNRC) has been a leading designer and manufacturer of a wide range of generators and other engine powered products. As a leader in power equipment serving residential, light commercial, industrial and construction markets, Generac's power products are available through a broad network of independent dealers, retailers, wholesalers and equipment rental companies. The Company markets and distributes its products primarily under its Generac and Magnum brand names.
Here are 5 reasons to be bullish on Generac Holdings now:
(1) On Monday, Generac Holdings announced a secondary offering, sending shares tumbling $3.28 per share or 9.29% on over 3.3 million volume, over five times the average. In apparent response, the company announced after the close the very same day it was withdrawing the same secondary offering it announced early "due to market conditions" -- that's Wall-Street-speak for "undervalued" and should immediately stand out as "game on" for shareholders. Not surprisingly, GNRC rebounded in after hours on the news.
(2) GNRC is forecast by analysts to have $1.13 billion in sales for 2012, a 43.2% growth over 2011, with EPS of $3.00, a 38% jump over 2011. When one considers that GNRC has a habit of smashing estimates, the actual reported sales and earnings could come in much higher.
(3) Hurricane Sandy following Hurricane Irene has been a big wake-up call for the need for back-up generators. There are even bills getting proposed in New Jersey that would require certain businesses to own back-up generators or be fined. If these bills are passed, which it would be hard to imagine that they wouldn't, it could be a big windfall for GNRC.
(4) Something that few investors may not understand is the sales cycle for generators following tragic events such as Hurricane Sandy that could lead to a huge 2013 many investors might not be expecting. From the October 31 third quarter conference call:
"The afterglow with home standby because that's a - there is a - that's a research purchased it's a - for longer sales cycle. There is - there is a lot more things involved there, so it's a bigger ticket item. There is building permits to pull when homeowners want to go through project like that. And so that afterglow can last between six and twelve months after this type of event."
(5) GNRC announced an all cash non-dilutive acquisition expected to close in January 2013 that will give GNRC an immediate jump in revenues (over $80 million) and opportunity to expand sales of their current products overseas into new markets. This will make for a 2013 that could blow away expectations.