PreMarket Prep Stock Of The Day: Generac

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

On the PreMarket Prep Show, we attempt to take what's happening in current events and identify potential investment or trading opportunities. During hurricane season, for example, we keep a close eye on insurance companies as well as other companies that may be positively or negatively impacted.

The deep freeze across the U.S. has been a catalyst for Generac Corporation GNRC, making it the PreMarket Prep Stock Of The Day.

The Company: Generac Holdings designs and manufactures power generation equipment and other engines- powered products serving residential, commercial, oil, gas, and other industrial markets. It offers standby generators, and portable and mobile generators for a variety of applications.

In addition, the company offers lighting, heating, pumps, and outdoor power equipment. Generac reports sales in multiple divisions: residential, commercial and industrial, and others.

Trading Range Until May 2019: After being in a $30-60 trading from January 2013 until May 2019, Generac broke out and didn't peak until March 2020 at $118.86. The rally was interrupted when the broad market caved in and the issued swooned to $75.50.

That low coincided with its October 2019 low ($75.10) and set the base for a major rally.

Pandemic Induced Buying Of Generators: The pandemic has induced all kinds of changes in consumer behavior, but from the look of the Generac chart, owning your home power source has been a top priority. As a result of many working from home and spending much more time in their abode overall, why not be protected if the grid goes down? Also, with the constant threat of cyberattacks on the grid, why not have your own power source in case that happens?

From its March low ($75.50) to its new all-time high made earlier in Tuesday’s session ($360.18), the issue has added 377%. That far surpasses the S&P 500 peak to trough return of 85%.

Deep Freeze Catalyst: Aggressive investors anticipated the impact of the cold spell in the U.S. and the market's reaction to it. After ending last Wednesday’s session at $277.54, GNRC rallied to end the week at $326.84, perhaps its largest two-day rally ever.

With the deep freeze accelerating over the weekend, the issue attracted buying interest off the premarket open at 4 a.m. ET. As of 2:45 p.m., the issue rallied all the way to $360.18 and profit-takers have nudged the issue under $350.