As Generac continues to recharge its growth, the maker of power generators has made a minority investment in Wallbox, a global leader in smart electric vehicle (EV) charging solutions. With the stock landing a spot on IBD Leaderboard, shares of Generac edged back into buy range Monday.
Alongside its minority stake, Generac has also taken a seat on Wallbox's board of directors. The partnership, announced in December, also highlighted how the deal enables Generac to offer its customers Wallbox's full suite of EV charging solutions.
Generac's distribution of Wallbox's technology, including its DC fast charger, Supernova, aims to accelerate the development of energy ecosystems for businesses with public access. That includes charging at supermarkets, shopping centers, restaurants and more. Generac and Wallbox said access to reliable DC fast chargers can add up to 100 miles to an EV's range in 10 minutes.
According to the joint news release, as consumers and businesses continue to electrify legacy systems and EV adoption accelerates, power consumption is projected to more than double by 2050. Plus, the share of renewables in the power mix is projected to more than double in the next 20 years.
Such growth drives demand for sophisticated technology that can manage energy generation, storage, and distribution between the current grid and next-generation EVs, which is key to accelerating the adoption of renewable energy.
Wall Street Fuels Demand For Generac
Rebounding fundamentals have driven institutional demand for Generac stock. In addition to sporting an A+ Accumulation/Distribution Rating, 59 funds with an A+ rating from IBD own shares of GNRC.
Driving that demand is rebounding sales and earnings growth and improved estimates. After several quarters of slowing growth, Generac generated 16% earnings growth to $2.07 per share in the fourth quarter. Following a string of slowdowns, sales grew 1% to just under $1.1 billion.
With earnings due May 1 before the market opens, analysts forecast a 21% year-over-year EPS gain to 76 cents a share. For Q2 and Q3, Wall Street sees earnings gains of 21% and 20%, respectively.
Overall, Generac earns a 92 Composite Rating — up from a much-weaker 69 on April 1.
GNRC Stock Recharging Breakout
From a breakout in June 2019 until peaking in November 2021, shares of Generac soared as much as 764%. Then the stock ran out of juice and fell into a steep, multiyear decline.
Having finally found its footing, Generac has joined IBD Leaderboard as it clears an alternate entry at 132.50 and shows a sharp rise in its relative strength line. Given the deep decline mentioned earlier, Generac can afford to keep building the right side of that base.
After briefly clearing the 132.50 entry on April 4, Generac soon wavered and slipped below that buy point. But the stock has shown resilience as it now fights to retake that entry in the current market correction.
Investors should remain cautious, with earnings due soon and IBD's recommended market exposure down to 0%-20%. But a strong earnings report and an improving market environment could provide the spark Generac needs to break out and continue its rebound.
Generac stock dipped Monday, but closed near the top of the day's buy range in the buy zone at 134.22.
Follow Matthew Galgani on X (formerly Twitter) at @IBD_MGalgani.
