Update - June 27, 2023

When the Lights Go Out

Will Generac Holdings (GNRC) be our next 200% winner?

The near-20% gain we’ve seen since we got in just three weeks ago sure points to some monstrous gains ahead.

It’s no surprise.

A fresh report from the North American Electric Reliability Corporation indicates that two-thirds of the United States – including almost everything west of the Mississippi – could be forced to deal with power outages this summer.

It’s bad news for all sorts of folks. But it’s great news for the company that is a bold leader in backup generator sales.

The reason the experts point to trouble should come as no surprise. They say the transition to green energy has been forced upon the economy too quickly and without proper planning.

Interestingly, the group reports that several critical coal plants are unable to secure ample supplies of fuel. The power generators blame mine closures and transportation issues. That means coal-conservation measures are in place.

According to the numbers I’ve seen, generation will be able to keep up with demand, assuming normal conditions. But if storms or extreme heat take any generators offline or push demand beyond traditional peak levels, trouble will brew.

Add that idea to the forecasts that have most of America’s largest cities expecting a hotter-than-average summer, and you get a recipe for blackouts.

Source: North American Electric Reliability Corp.

But there’s another factor here that’s not getting much attention. It should.

If storms wreak havoc on parts of the country over the next few months, getting the grid repaired and operating again could take much longer than normal. That’s because there’s a serious shortage of distribution transformers – the units that turn high long-distance transmission voltage into the lower voltage used by the final consumer.

Many utilities across the country are sitting on very low levels of the emergency stocks that are used when natural disasters or other catastrophes strike.

That means we don’t have just a generation and fuel source problem… We also have transmission issues.

Again, it’s all very good news for Generac. That’s why the share price is rising.

It will rise more as the season heats up and more investors realize what’s happening. The stock will soar if even just one or two regions run into trouble.

It’s never good to wish for trouble. That’s not what we’re doing with this play.

We are preparing. We are investing in a company that is working to provide a solution (there are others in our portfolio as well).

If you don’t own shares of Generac yet, buy them now. The data tells us this is an ideal stock to own right now.

This one could be a huge winner by the end of the summer.