Generac Holdings Inc. (NYSE:GNRC) was featured on Mad Money as Jim Cramer shared his take on the stock amid a sliding macro environment. Cramer discussed the stock’s price action and the reasons behind it, as he stated:
Generac stock is more quizzical. Generac, the company that makes backup generators, is going great guns. It’s always had a strong residential business because of the debilitated electric grid and the increasingly erratic weather. Sure, the residential business struggled last year with rates still elevated and a light hurricane season last fall. But after some severe winter storms and with just a little help on rates, well, that could be much better.
It’s Generac’s other business, the commercial business that excites people. Generac is being pursued by many a data center builder and hyperscalers to provide backup power to their sites. CEO Aaron Jagdfeld said something you always want a CEO to say: that the clients are calling him and ordering things, not the other way around. Great businesses are ones where a company’s salespeople are simply taking orders. That’s Generac. But what happens? The stock was actually down 10% at one point yesterday after Generac told the story because they did not announce a long-term contract from a hyperscale at their investor day. Without that, prospective shareholders refused to pull the trigger, although the stock had a nice jump in the afternoon after some analysts pulled it up.
The fact that it was down 50 points from its high with a much better story than when it hit that exalted level meant nothing to this market because maybe the hyperscalers don’t have the money to buy more Generac or maybe Cummins, even Caterpillar, the principal providers of backup power, are doing better, and that’s all the hyperscalers needed. Today, the stock got blasted, falling $7 and change. Yes, the idea that things are okay now, but just you wait, well, that’s what people are thinking. Just you wait. It’s the true story behind these two stocks and hundreds of others. Only the end of the war and lower interest rates will change the macro morass. Right now, neither is in sight, so both stocks go wanting, even though in theory, they make a ton of sense to own right 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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