For most investors, how much a stock's price changes over time is important. This factor can impact your investment portfolio as well as help you compare investment results across sectors and industries.
The fear of missing out, or FOMO, also plays a factor in investing, especially with particular tech giants, as well as popular consumer-facing stocks.
What if you'd invested in Generac Holdings (GNRC) ten years ago? It may not have been easy to hold on to GNRC for all that time, but if you did, how much would your investment be worth today?
Generac Holdings' Business In-Depth
With that in mind, let's take a look at Generac Holdings' main business drivers.
Headquartered in Waukesha, WI, and founded in 1959, Generac Holdings Inc. is a leading manufacturer of power generation equipment, energy storage systems and other power products including portable, residential, commercial and industrial generators. In addition, the company manufactures light towers, which provide temporary lighting solutions for various end markets, and commercial and industrial mobile heaters and pumps that are used in the oil & gas, construction and other industrial markets. Its product portfolio also includes engines, alternators, transfer switches, mobile heaters, power washers, water pumps, energy monitoring devices and other components of outdoor power equipment for residential and commercial use. The company has a wide distribution network spanning independent residential dealers, industrial distributors and dealers, national and regional retailers, e-commerce partners, wholesalers, equipment rental companies, equipment distributors, and solar installers. It also boasts a direct sales channel to various individual customers.
Generac broadly classifies its products into three categories depending on the end user types, namely Residential, Commercial & Industrial (C&I), and Other products and services. The Residential business includes automatic standby generators that run on natural gas, liquid propane, diesel, air-cooled engine generators for emergency backup in small to medium-sized homes, and liquid-cooled engine generators for larger homes and small businesses. It also provides remote monitoring system for home standby generators called Mobile Link, offering Wi-Fi-enabled feature to conveniently check the status of generator online, while receiving maintenance and service alerts. The C&I generators that run on diesel, natural gas, liquid propane and Bi-Fuel cater to small and mid-sized businesses. The Other products and services category primarily comprise aftermarket service parts and product accessories.
Generac has two operating segments — Domestic and International. The Domestic segment (85.8% of first-quarter 2021 revenues) includes the legacy Generac business and operations that are based in the United States and Canada. The International segment (14.2%) includes the Latin American export operations, and other business units that generate revenues from outside the United States and Canada.
Putting together a successful investment portfolio takes a combination of research, patience, and a little bit of risk. For Generac Holdings, if you bought shares a decade ago, you're likely feeling really good about your investment today.
According to our calculations, a $1000 investment made in June 2011 would be worth $21,307.45, or a gain of 2,030.75%, as of June 24, 2021, and this return excludes dividends but includes price increases.
Compare this to the S&P 500's rally of 230.49% and gold's return of 13.59% over the same time frame.
Analysts are anticipating more upside for GNRC.
Generac is well positioned to benefit from a diversified business model and higher market penetration, driven by an aging power infrastructure. Record revenues and high shipments with a robust liquidity position are likely to boost its growth momentum in 2021. It has established a new business organization, Energy Technology, as part of its ‘Powering Our Future’ strategy with plans to open new manufacturing, assembly and distribution operation in Trenton, SC. It continues to see robust demand for its home standby generators due to higher power outages. Recovering Commercial & Industrial markets act as a tailwind. Improved service capabilities, along with an extended footprint in the clean energy market, bode well. However, stiff competition from diversified industrial companies, and high research and development expenses are concerns.
Over the past four weeks, shares have rallied 26.83%, and there have been 9 higher earnings estimate revisions in the past two months for fiscal 2021 compared to none lower. The consensus estimate has moved up as well.
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