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Were you among the millions who lost power thanks to Superstorm Sandy ? Maybe you were among millions who lost power from the derecho storm that moved from the Midwest to the mid-Atlantic last summer. Or maybe you’ve been prey to a local power outage caused by a tree getting blown over in a summer thunderstorm?

Regardless, you are almost certainly among the many who have, at one time or another, experienced a loss of electrical power lasting anywhere from a few hours to many days. And, you may even realize that this has been increasing in frequency over the past several years. Below is a graph showing the number of outages affecting 50,000 or more customers in the United States since 2000.

Source: Electric Disturbance Event annual reports, Office of Electricity Delivery & Energy Reliability, DOE.

One thing that will certainly improve that situation is for us to rebuild the electrical power infrastructure in this country. But that will likely take years (and lots of arguments). In the meantime, many will buy backup generators. And the leading company in that space is Generac Holdings .

What it does
Generac’s been around for over 50 years, but it’s only been a public company since early 2010 . It manufacturers backup power generators for homes, RVs, and commercial and industrial customers. Its portable generators are used to bring power and light to places that need it temporarily (e.g., nighttime road construction). And it can connect its permanent generators to a natural gas line and use that as fuel, automatically switching on when you lose power. Currently, it owns about 70% market share for home standby generators.

Not only is keeping your home powered important to you, but keeping the power on is a necessity for businesses. For example, restaurants, grocers, and convenience stores all need to store food at controlled temperatures and can lose thousands of dollars if their power is off for too long. Hospitals need to keep critical equipment running. This is an underserved market that Generac is going after. 

The opportunity
Even if we were just talking about an aging electric grid, the opportunity for the company is quite large. Add in the fact that we’re experiencing more severe weather and how that affects electrical power reliability, and the opportunity expands just a bit.

Further, with the housing recovery finally gaining traction — and thus homeowners more willing to invest in their homes — and with cheap and plentiful natural gas to hook into the generators, the timing for investing in this company looks pretty good. Finally, the company just acquired Ottomotores , which gives it a foothold in Latin America as it moves internationally.

Dark clouds
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Source: FULL ARTICLE at DailyFinance