Generac Holdings Shares Popped: What You Need to Know


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of backup power provider Generac Holdings (NYS: GNRC) jumped 15% today after the company announced a big increase in expectations for 2011.

So what: Power outages in the Midwest and along the East Coast have resulted in surging demand for Generac's products across the board. Residential product sales are expected to increase 50% in the third quarter and 15% to 20% in the fourth quarter, up from a previous expectation of flat sales. Commercial and industrial product sales are still expected to grow double digits.

Now what: The huge spike in expected sales is in the face of a market that seems to be more concerned about an economic slowdown every day. The only downside is much of the demand Generac will see in the next six months is likely to be short-lived unless power outages continue. With that said, shares are priced at just 9 times next year's expected earnings, so any jump in demand may prove the stock to be a great value at its current price.

Interested in more info on Generac? Add it to your watchlist byclicking here.

At the time thisarticle was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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