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Here's Why Generac (GNRC) is a Promising Pick for Investors

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Shares of Generac Holdings Inc. (GNRC - Free Report) have returned 203.8% in the past year compared with 160.3% growth of the industry. Currently, the stock carries a Zacks Rank #2 (Buy) and has a VGM Score of B.

This Waukesha, WI-based company delivered a trailing four-quarter earnings surprise of 24.2%, on average. The Zacks Consensus Estimate for its current-year earnings has been revised 2.1% upward over the past seven days.

Growth Drivers

Generac is a leading manufacturer of energy technology solutions and other power products. The company continues to see unprecedented demand for its home standby generators due to higher power outages, while the ‘Home as a Sanctuary’ trend gains traction.

Changes in the energy landscape, drastic climate change, aging power infrastructure and deployment of super-fast 5G technology are likely to spur secular growth opportunities for Generac. The company aims to capitalize on these key growth drivers by generating more sales through higher market penetration. A diversified distribution channel further ensures that the products reach a broad global customer base.

The company has the largest network of factory direct independent generator dealers in the industry in North America. Generac intends to diversify its business model from being the sole equipment-centric to a systems and services provider through connectivity solutions and subscription-based applications. Its products are well suited to accelerate the transition from traditional fossil fuel to clean environment-friendly natural gas.

Generac announced plans to open new manufacturing, assembly and distribution operation in Trenton, SC. The facility will support increased demand for home standby generators and associated energy technologies. It will also serve as a distribution center to customers in the southeast part of the United States. This reflects increased demand for power generation and new energy technologies.

Furthermore, Generac established a new business organization as part of its ‘Powering Our Future’ strategy. Named Energy Technology (“ET”), the new organization comprises all Generac’s businesses, which mainly focuses on products or services related to storage and energy management products. These consist of Generac’s acquired Pika Energy, Neurio Technologies and Enbala Power Networks as well as its existing connectivity business. The combination of these teams into one operating group will help position the company as an emerging leader in the energy storage and management industry. It will also align business priorities and accelerate Generac’s go-to-market efforts. The ET organization will serve as the operating platform for future potential acquisitions in the energy technology industry.

The company expects 2021 to be a very strong year, given the significant momentum for its residential products and an expected return to growth for its Commercial & Industrial products. A strong balance sheet and significant liquidity enable Generac to capitalize on key trends and drive additional shareholder value by expanding its addressable markets.   

Other Decent Choices

Some other top-ranked stocks in the broader industry are Aviat Networks (AVNW - Free Report) , Plantronics (PLT - Free Report) and Ubiquiti (UI - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Aviat Networks delivered a trailing four-quarter earnings surprise of 61.7%, on average.

Plantronics delivered a trailing four-quarter earnings surprise of 560.4%, on average.

Ubiquiti delivered a trailing four-quarter earnings surprise of 37.1%, on average.

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