The Hurricane Factor: Stocks That Spike During Hurricane Season
Hurricanes aren't just a sign of climate change and natural disasters. For some investors, hurricanes are an opportunity to build wealth.
July 7 2021, Published 1:39 p.m. ET
Hurricanes aren't just a sign of climate change and natural disasters. For some investors, hurricanes are a chance to build wealth. Those in the opportunistic group pay attention to stocks that do particularly well amid hurricane season.
Finding stocks that benefit from hurricanes requires a dive into industries that fare better under stormy skies.
Certain industries see increased demand during hurricane season.
Hurricanes and tropical storms can be devastating. This is especially true considering that "the intensity, frequency, and duration of North Atlantic hurricanes, as well as the frequency of the strongest hurricanes, have all increased since the early 1980s" according to the National Climate Assessment.
Some industries play a key role during hurricane season. One of those industries is the home improvement space. Residents in storm paths prepare their properties and belongings with home improvement supplies before storms hit and local areas implement evacuation protocols.
Additionally, generator and battery companies see a spike in demand during these times. This is another industry heavily involved in hurricane preparation.
Before and during a storm, fuel companies see a spike as evacuees travel outside of their local area to see shelter from hurricanes.
Following storms, the water treatment and engineering response industries play a critical role.
Stocks that tend to do well before, during, and after hurricanes
Companies within hurricane-focused industries can see a spike during storm season whether or not they're local to the storm path. National and regional companies alike can see a boost.
Knowing that the Atlantic and Pacific hurricane season extends from May 15–Nov. 30 each year, you can analyze a company's historic performance with the hurricane factor in mind.
Home Depot and Lowe's stocks see an uptick during hurricane season.
Home Depot Inc. (NYSE:HD) and Lowe's Companies Inc. (NYSE:LOW) stocks have both historically risen during hurricane season. Both stocks are up marginally as tropical storm Elsa makes landfall in Florida. The rate of returns could increase over the rest of the season.
Generac and Caterpillar represent the generator industry
In 2016, Berkshire Hathaway (NYSE:BRK.B) purchased well-known battery company Duracell and took the reins from consumer staples giant Procter & Gamble (NYSE:PG). While Berkshire offers more diversified holdings, it's a blue-chip bet on hurricane necessities.
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. Polar Power, Inc. (NASDAQ:POLA) is a hit due to its cross offerings of generators and solar power.
Xylem, Aecom, and other hurricane-minded companies to consider
Global engineering firm Aecom (NYSE:ACM) plays a big role in redevelopment following hurricanes. There's also Fluor Corp. (NYSE:FLR), although that stock is more volatile over the long term, which makes swing-term investing more difficult.
Water treatment company Xylem Inc. (NYSE:XYL) plays a role in hurricane recovery.
Also, oil companies like Chevron Corp. (NYSE:CVX) and Penn Virginia Corporation (NASDAQ:PVAC) could see a spike as hurricanes necessitate travel.
Despite the historical performance of certain hurricane-adjacent industries, due diligence for current corporate circumstances and fiscal strength is necessary for all stocks.