California is experiencing irony so painful that you either have to laugh or cry. It’s the center of the world’s high-tech industries and the beating heart of high-tech innovation.
And yet, when the fall fire season rolls around, we’re likely to, once again, go through a series of shutdowns to that most basic piece of technology in our everyday lives, the power grid.
This trend is getting worse every year. In 2018, there were 20,598 blackouts, that affected 19 million people, and in 2019, that number rose to 25,281 blackouts affecting 28.4 million people.
That means that this is a problem that has worked its way up to affecting almost 75% of the people in the most populated state in the union.
But the good news is that one company can help get things up and running again…and fast.
It’s a world leader in the $17.4 billion market.
So, because they do such a good turning the lights back on when they go out, it’s going to make you a lot of money…
An Annual Crisis
Now then, please don’t think I’m exaggerating the importance of the fall power shutdowns.
Yes, I realize it’s not completely analogous to what happened during the administration of Governor Gray Davis. He was recalled from office back in 2003 after the state suffered rolling blackouts due to some very bad energy contracts for which voters partly blamed him.
But if this fall is anything like the last few, we could see millions of businesses, homeowners and family members in the Golden State go days without power.
And while that may be bad news for Californians, it’s great for savvy tech investors – if you know where to look.
See, the company I want to talk about today is specifically targeting its backup power business at California, because of the state’s many power shutdowns.
The market opportunity for the firm here is huge. Despite years of power shutdowns, only 1% of California homes have standby power.
It’s a clever move, targeting California. Generac wouldn’t be the first business to turn cutting-edge innovation into massive profits in California, and they certainly won’t be the last either.
Just since December of 2020, Silver Spike Acquisition Corp. (SSPK), has seen its price almost double, thanks to its clever moves into California’s fast-growing cannabis industry.
Now, there are even more opportunities for profit from the explosive growth of the Cannabis sector. Cannabis stocks in America are already up 189% on average so far this year. We can show you exactly which moves to make right here.
But in Generac’s case, they estimate that every additional 1% of the American standby power market it captures translates into a whopping $2.5 billion in sales.
That’s on top of the $2.5 billion in net sales this firm scored in 2020, 63% of which came from residential customers like you and me.
The First Name in Generators
I’m talking about Generac Holdings Inc. (GNRC), the first company to create a home standby generator and build an engine specifically for that purpose.
Started in 1959, and still headquartered in Waukesha, Wisconsin, Generac is now the world ‘s No. 1 builder of home backup generators.
But since its beginnings, it has found other opportunities to use its technology to compete in developing sectors.
For example, it wasn ‘t a big jump to expand its line from home backup to industrial use, like construction. There’s a strong tech angle with generators deployed for telecommunications, healthcare, cloud computing data centers, and now, storage for wind and solar power.
And the fact that Generac is such a big name in telecommunications backup power says a lot right there. Those systems run on what are known as the 5 Nines – 99.999% uptime, 24/7.
The 5G rollout is a huge opportunity here, as the new wireless standard requires thousands of new stations across the country – and each one has to have that 99.999% uptime.
That kind of reliability has been built into their products since Day One. I mean, if you ‘ve spent any time in a Midwest winter, you know that Generac wouldn ‘t be around today if it couldn ‘t keep folks cozy – and safe – when the winter winds and snow moved in off the Great Lakes or the frigid plains of Kansas.
The firm has come a long way. It now boasts 6,800 employees and does business in over 150 countries.
But the company still stays focused on what it does best – provide reliable electricity to its customers whether in the middle of a big city or in the middle of nowhere.
Home Energy Solutions
There are two basic systems for home – standby power and portable generators. The standby systems can run on propane, natural gas, or diesel.
They are basically hard-wired into the home ‘s power system. When the grid goes down, an automatic transfer switch shifts power to the generator seamlessly.
These systems can power an entire house for a couple of days on a tank of fuel if you ‘re using diesel or propane. It ‘s unlimited if you ‘re running natural gas.
Portable generators differ in the fact that they ‘re not hard-wired into the house and are wheeled out when necessary. They usually don ‘t power an entire house but are designed to keep the lights on, the fridge cold, and the TV on for several hours on each tank of fuel.
Generac’s portable generator transfer station is not only ultra-safe, it can easily be upgraded to an automatic one. That means should, for example, California’s shutdowns become too severe, people can move up to a Generac standby. We ‘d still have the portable in case of an earthquake and run that off propane.
Make no mistake. Generac faces a huge upside, especially here in California.
In fact, 80% of Generac’s home standby power units are retrofitted onto existing homes. So, the firm is not held back by the lack of new housing construction.
Now, since the market turned on March 23, 2020, the S&P 500 is up a stunning 92.6%.
But Generac crushed that with a return of 287%.
I’m conservatively projecting earnings growth of 24% a year, which would have them double in just three years.
With that kind of growth, Generac will help you power your portfolio and get you closer to financial freedom.
Cheers and good investing,
Michael A. Robinson