Chart Spotlight: Generac Holdings (GNRC)

Every summer, power generator stocks, like Generac Holdings (GNRC) soar.

All thanks in part to hurricane season, intense heat, and the potential for blackouts. All of which increases demand for power generators from companies such as Generac Holdings.

  • In the summer of 2017, GNRC jumped from about $35 to $38
  • In the summer of 2018, GNRC jumped from about $50 to $56
  • In the summer of 2019, GNRC jumped from about $57 to $75
  • In the summer of 2020, GNRC jumped from about $112 to $191
  • In the summer of 2021, GNRC jumped from about $319 to $420

Even better, three out of the last four monthly MarketClub Trade Triangle signals highlighted a positive move for the stock.

The last monthly green Trade Triangle was issued at $118.86 on May 26, 2020 and pointed to a move higher all the way to the red monthly Trade Triangle at $391.85 on December 3, 2021.

GNRC Chart with Monthly Trade Triangles

Source: MarketClub

While summer 2022 hasn’t started off well for the GNRC, or for any stock out there, it is currently oversold. From a current price of $222.23, I’d like to see the GNRC stock challenge $300 a share again, near-term.

For one, the oversold generator stock could benefit as “demand for uninterrupted and reliable power supply has increased significantly, which has led to the sale of generators. Therefore, generators are considered a robust medium in providing power backup in industrial buildings, data centers, and at times in emergencies,” as noted by Astute Analytica. 

Two, according to Northland analyst Donovan Schafer said Spruce Point's short report on Generac issued on June 22 "pedantically focuses on immaterial issues" and was "deeply-flawed." He maintains an Outperform rating and $370 price target on Generac shares.

Three, The Wall Street Journal says, “From California to Texas to Indiana, electric-grid operators are warning that power-generating capacity is struggling to keep up with demand, a gap that could lead to rolling blackouts during heat waves or other peak periods as soon as this year.”

Even the Electric Reliability Council of Texas (ERCOT), which operates Texas’ electric power grid, is asking households and businesses to conserve power, warning of rolling blackouts. The grid faces a “potential reserve capacity shortage with no market solution available,” ERCOT said.

Four, analysts at Wells Fargo just initiated coverage of the GNRC stock with an overweight rating, with a price target of $285. The firm believes Generac Holdings is a play on the instability of the current grid.

With that in mind, I believe shares of Generac Holdings (GNRC) could rocket higher. Again, from a current price of $222.23, I’d like to see GNRC stock at $300 a share again, near-term.

Ian Cooper Contributor

Disclosure: This contributor did not hold a position in any investment mentioned above at the time this blog post was published. This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from for their opinion.