Searching For Value In Generac Shares In The Wake Of Hurricane Irma

Should investors consider investing in Generac Holdings Inc. GNRC, a designer and manufacturer of power generation equipment and other engine powered products, amid Hurricane Harvey and Irma? In short, not necessarily, at least according to analysts at Canaccord Genuity. Canaccord's John Quealy maintains a Hold rating on Generac's stock with a price target boosted from $40 to $42. While the company will indeed see an uptick in demand for power quality and reliability solutions over the long term, investors should wait for a better entry point before buying the stock.

Generac is in the process of rolling out new products and ideas, such as wifi-connected home standby units and new 750kW gas C&I generation sets, the analyst said in a research report dated Sept. 8 and written after the company hosted its biennial investor day event. Of particular note, the company's embrace of connectivity is "encouraging" as distributed generation, connected cars and energy efficiency markets are in the early stages of converging. Related Links: Generators To Insurers: Trading Tropical Storms The Hurricane Matthew Disaster Play Selloff

In the meantime, the stock continues to trade with "hurricane headline volatility" although not so much from Harvey but mostly from Irma.

Finally, the company's new ideas and products fit in with the company's "very doable" 2020 EBIT goals and the stock more diversification, de-leveraging and continued execution may be needed before being construction on the stock.