Skip to content

This Michael Burry stock tumbled 20% in a month; Buy the dip or steer clear?

This Michael Burry stock tumbled 20% in a month; Buy the dip or steer clear?

Last month, Finbold provided valuable insights into the top 10 stock holdings of the legendary investor and fund manager, Michael Burry

Among his portfolio holdings was Generac Holdings (NYSE: GNRC), a US-based manufacturer of backup power generation products, accounting for approximately 0.5% of his total investments. 

However, in the past month, GNRC suffered a significant setback, with its stock value plummeting by nearly 20%, pushing its market capitalization down to $5.66 billion as of October 20. 

GNRC 1-month price chart. Source: Finbold

Today, we analyze GNRC’s current situation to help investors determine whether the stock presents an attractive buying opportunity or should be approached with caution.

GNRC enters oversold territory

GNRC embarked on a sharp downward trajectory in August when the company reported worse-than-expected earnings and offered disappointing guidance for the second half of 2023. 

Citing the “softer-than-expected consumer environment,” Generac expects net sales to drop between 10% and 12% for the full fiscal year, significantly wider than its previous guidance for a decline of 6% to 10%.

Naturally, the outlook eroded investors’ confidence, prompting a notable sell-off. 

However, this decline may have a silver lining, for those willing to look from another perspective. Notably, recent share price losses have tipped GNRC into oversold territory, hitting a relative strength index (RSI) of around 24. 

GNRC’s RSI. Source:

For comparison, the current RSI reading of the S&P 500 ETF (SPY) is 45.1. For that reason, stock market bulls may interpret the current GNRC’s RSI as a sign that the recent heavy sell-off may be nearing exhaustion, and start to look for entry point opportunities on the buy side.

On the other hand, there are some areas for concern. For instance, Generac’s Return on Equity (ROE) currently sits at around 8%, which is significantly lower than the industry average of 16%.

Wall Street’s view

Taking into account the factors mentioned earlier, there are compelling arguments to be made both for an optimistic outlook and a pessimistic one concerning GNRC.

Meanwhile, Wall Street’s view of the stock remains largely bullish. The average 12-month price target on the GNRC currently sits at $139, based on coverages of 22 analysts in the past three months.

This price objective implies a possible upside of more than 54%.

Analysts’ price target and rating for GNRC. Source: TipRanks

During that 3-month period, 13 experts rated the stock as a ‘Buy,’ 7 advised a ‘Hold’ and just 2 think it is a ‘Sell.’ 

Buy stocks now with Interactive Brokers – the most advanced investment platform

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

Best Crypto Exchange for Intermediate Traders and Investors

  • Invest in 70+ cryptocurrencies and 3,000+ other assets including stocks and precious metals.

  • 0% commission on stocks - buy in bulk or just a fraction from as little as $10.

  • Copy top-performing traders in real time, automatically.

  • Regulated by financial authorities including FCA and FINRA.

2.8 Million Users
eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. eToro USA LLC does not offer CFDs, only real Crypto assets available. Don’t invest unless you’re prepared to lose all the money you invest.

Read Next:

Weekly Finance Digest

Related posts