Should Generac Stock Be On Your Radar?

What investors should know before buying GNRC

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Generac Holdings Inc. (NYSE:GNRC) is an American manufacturer and designer of backup power generation products for residential, light commercial, and industrial markets. On June 1, Generac Holdings announced its acquisition of Deep Sea Electronics Limited, an advanced controls designer and manufacturer that offers solutions for multiple applications including generators, automatic transfer switches, battery charging, and off-highway vehicles.

It's been an outstanding year for Generac stock, up 186% year-over-year and scoring a record high of $364 on Feb. 22. The caveat is this price action has drained GNRC of pessimism to be potentially unwound--14 of 16 analysts rate the stock a "strong buy" and a slim 2% of its total available float is sold short.

The good news though, is that buying options on ETSY may be the way to go. GNRC's Schaeffer's Volatility Index (SVI) of 33% sits in the bottom percentile of its annual range, and its Schaeffer's Volatility Scorecard (SVS) ranks at 9882out of a possible 100. This implies options players have been pricing in relatively low volatility expectations for Generac stock at the moment, while the equity has tended to exceed these expectations -- a good thing for buyers. 

From a fundamental point of view, Generac stock is an intriguing growth play for potential investors. Generac Holdings' revenues have grown by 64% and its net income has increased by 184% since fiscal 2017. As a result, Generac stock trades at a fairly elevated price-earnings of 45.95. Generac stock also has an estimated forward price-earning ratio of 33.67, which is still fairly high but is much more appealing than the current value. Overall, Generac stock still packs some strong growth potential in the future, but potential investors should be aware that Generac Holdings stock has already experienced significant growth over the past few years.


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