Packing winds of up to 150 mph, hurricanes take no prisoners when they hit land. However, high winds and natural disasters don’t just blow in devastation; they blow in profits. Money can rain down like confetti on the fourth of July. And for the market-wise and savvy, hurricanes are a chance to build wealth. Here are a few of the top hurricane stocks that spike during hurricane season you may want to pay attention to.
Do Hurricanes Affect Stocks?
Without a doubt, October has a history of delivering major hurricanes. Especially so in the western Caribbean, where ocean heat content or “available energy” for hurricanes can be pretty high.
When warm ocean water evaporates, it heats the surrounding air, fueling the growth and intensity of the storm. Similarly, the Atlantic hurricane season runs from June through November on the East Coast, providing a robust and short-term tailwind for certain companies.
It can be devastating. Do you think of the East Coast when you think of hurricanes? Not typically right? Usually, you think Florida, the Carribian, Puerto Rico, etc.
However, hurricane season hits the East Coast as well. Hurricane Sandy was the worst one in most recent years on the East Coast. High winds and torrential rain hit and causes a lot of devastation.
It can take months or even years for clean up and repair to happen. Which means supplies, labor, and fuel. That can be costly.
But at the same time, companies do well in those times. So what hurricane stocks profit from this natural disaster?
A Quick Rainy Day Takeaway on Hurricane Stocks
- Hurricane season puts many businesses and industries at risk if they’re located in hurricane-prone areas.
- Companies within hurricane-focused industries can see a spike during storm season whether or not they’re local to the storm path.
- Knowing that the Atlantic and Pacific hurricane season extends from May to November each year, you can analyze a company’s historic performance with the hurricane factor in mind.
- We typically see a run on stores like Home Depot, Lowe’s and Walmart before and after hurricanes.
Hurrican Stocks Profiting From The Destruction
It goes without saying, some industries play a vital and vital role during hurricane season. Unequivocally, one of those industries is in the home improvement space. Once warned of pending natural disasters, homeowners rapidly mobilize to prepare their properties with food and supplies. Yet, at the same time, they’re battening down the hatches, preparing for the worst-case scenarios.
Predictably, stores see a run on food, rations, generators, gas, and pretty much anything else involved in hurricane preparation. And when all is said and done, someone needs to clean up the disaster. Waste management services are critical to restoring life back to normal. Likewise, it may be worth your while to invest in them.
Companies That Benefit From Hurricane Season
Don’t rush in to trade disaster. Instead, look carefully, and follow the money. Below are a few hurricane stocks that typically do well during hurricane season:
- HD (Home Depot)
- MPX (Marine Products)
- LOW (Lowe’s Companies)
- KMX (CarMax)
- CAT (Caterpillar)
- GNRC (Generac Holdings Inc.)
Hurricane Stocks: Home Improvement Companies
Without a doubt, It can be tricky to buy stocks during hurricane season or any season for that matter. With thousands of choices, where does one turn?
My advice is this: regardless of the time of year, stick with the tried and tested companies that perform well regardless of what month it is. Home Depot is one such stock.
With over 2,200 stores across the United States, Canada, and Mexico, Home Depot is one of the world’s largest home improvement retailers.
Historically, the stock has performed well, but the pandemic was a game-changer for this Company.
Many decided to tackle the long-forgotten home improvement projects with pretty much everyone stuck at home.
And, it showed. From mid-March 2020 through last month, HD stocks realized an astonishing 91.8% gain, with shares closing at $410.84 in the latest trading session.
Hurricane Stocks: Generator Companies
Everyone knows that power outages often happen during a hurricane. And the loss of power means the loss of hot water and the ability to keep your perishable food cold. And as the severity and frequency of these natural disasters increases, so does the demand for emergency power supplies and backup generators.
Generator providers Generac Holdings Inc. (NYSE: GNRC) and Caterpillar Inc. (NYSE: CAT) stand to profit during hurricane season, which can influence their earnings down the line.
Case in point, GNRC ran from 286 pre-hurricane seasons to highs of $500 in November. In addition, polar Power, Inc. (NASDAQ: POLA) is a hit due to its cross offerings of generators and solar power.
Ultimately, though, if storm season numbers surge, you will get bang for your buck. Hurricanes have caused nine in 10 major power outages in the U.S. in recent years.
Hence, when that inevitably happens during the upcoming season, people will be rushing to their local generator suppliers to stock up.
One can be sure that winds topping 150km/hr are going to cause significant damage requiring major rebuilding efforts. AECOM (ACM) and Fluor Corp (FLR) are two engineering companies that play a vital role in rebuilding. At this point, it might be worthwhile to look at these hurricane stocks to see if they’re worthwhile investments.
Water Treatment Companies
The fountain of life, without it, we last mere days. For that reason alone, it is one of the most valuable commodities on Earth. Life as we know it wouldn’t exist without water. Access to clean drinking water means the difference between life and death for many caught in the ravages of a hurricane.
Companies that test and treat water, making sure it’s drinkable, tend to thrive after a bad storm. Did you know that the government often contracts out companies with the capability to test, treat and transport drinking water after a hurricane? One of them in particular, Xylem Inc. (NYSE: XYL), plays a major role in providing safe drinking water post-disaster. As a result, it is one of the major companies to watch during storm season.
A Stormy Day Take Away
No doubt, after a hurricane hits, the demand for supplies skyrockets. As always, run the numbers and do the math before investing in any stocks, hurricane or not. You can easily profit from hurricane stocks if you know how to trade them. With Bullish Bears, you’ll have access to over $3,000 worth of free courses with no commitment required. Thanks for taking the time today to read this article.