Generac Holdings Inc. (NYSE:GNRC) was featured on Mad Money when Jim Cramer shared his view on stocks amid a sliding macroeconomic environment. Cramer analyzed the share price action and the reasons behind it, as he stated:
Generac stock is more mocking. Generac, the company that makes backup generators, is seeing great results. It has always had a strong residential business due to the weakened power grid and increasingly erratic weather. Sure, the residential business struggled last year with rates still high and a light hurricane season last fall. But after some severe winter storms and with just a little help with rates, that could be much better.
It’s Generac’s other business, the commercial business that people get excited about. Many data center builders and hyperscalers are looking to Generac to provide backup power to their sites. CEO Aaron Jagdfeld said something you always want a CEO to say: that customers call him and order things, not the other way around. Large companies are those where a company’s salespeople simply take orders. That’s Generac. But what happens? In fact, the stock was down 10% at one point yesterday after Generac told the story because they didn’t announce a long-term contract from a hyperscaler at their investor day. Without that, potential shareholders refused to pull the trigger, although the stock took a nice jump in the afternoon after some analysts did.
The fact that it’s down 50 points from its high with a much better history than when it reached that exalted level means nothing to this market because maybe the hyperscalers don’t have the money to buy more Generac or maybe Cummins, even Caterpillar, the major backup power providers, are doing better, and that’s all the hyperscalers need. Today, the stock took a hit, dropping $7 and change. Yes, the idea that things are fine now, but wait, well, that’s what people are thinking. Just wait. It’s the real story behind these two stocks and hundreds of others. Only the end of the war and lower interest rates will change the macroeconomic morass. Right now, neither are on display, so both stocks remain in short supply, although in theory it makes a lot of sense to own them here.
Photo by Adam Nowakowski on Unsplash
Generac Holdings Inc. (NYSE:GNRC) manufactures and distributes energy technology products, including residential and industrial generators, battery storage systems, smart home solutions and outdoor power equipment.
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