Generac Holdings’ RS Rating Upgraded, But Failed Breakout and Later-Stage Base Present Risks

On Thursday, Generac Holdings (GNRC) received an upgrade in its Relative Strength (RS) Rating from 79 to 83. The RS Rating, which ranges from 1 to 99, is a proprietary rating by IBD that indicates market leadership. It compares a stock’s price behavior over the past 52 weeks to all other stocks in the database. Stocks with an RS Rating of at least 80 often go on to make significant gains.

Despite this positive news, Generac Holdings stock has fallen below its previous entry point of 133.15 after experiencing a breakout earlier in the cup with handle formation. If a stock breaks out and then falls 7% or more below the entry point, it is considered a failed breakout, and waiting for a new base to form is advisable. Additionally, the most recent pattern is a later-stage base, which increases the risk associated with establishing a new position or adding shares to an existing one.

In terms of financial performance, Generac Holdings has shown three quarters of accelerating earnings growth and rising revenue gains during the same period. The company is expected to report its next quarterly numbers around May 1st. Within the Electrical Power/Equipment industry group, Generac Holdings stock holds the No.13 rank among its peers. Other highly rated stocks in the industry group include nVent Electric (NVT), Vertiv Holdings (VRT), and Gates Industrial (GTES).

Given its recent RS Rating upgrade and strong financial performance indicators, Generac Holdings may be worth keeping an eye on for investors looking for top stocks to buy and watch. MarketSurge’s tools such as IBD Live, SwingTrader, and growth stock research tools can provide valuable insights for individual investors looking to capitalize on short-term trends and identify top stocks.