The 2024 hurricane season is underway, and experts are forecasting that it will be severe, as the frequency and intensity of storms continue to increase due to climate change.
Safety is, of course, the top priority when preparing for hurricanes. However, many investors are also keenly aware of how these natural disasters can affect the stock market.
It’s fairly well known that big-box home improvement retailers like Home Depot and Lowe’s tend to see a surge in sales following major storms, as was the case after Hurricane Harvey in 2017.
But beyond these retail giants, there are several lesser-known stocks with strong potential for growth, both during the present hurricane season and in the longer term.
Let’s explore a few of these companies.
Builders FirstSource (BLDR)
Builders FirstSource is one of the largest U.S. suppliers of building products, components, and services for construction, repair, and remodelling contractors.
Unlike Home Depot and Lowe’s, which sell to both consumers and contractors, Builders FirstSource exclusively serves the professional market.
The company is positioned to benefit from increased demand for construction materials and services during the rebuilding process in the wake of a major storm.
There is also a nationwide shortage of more than 4 million homes, giving Builders FirstSource a strong outlook even without factoring in hurricane risks, as builders are likely to stay busy for the foreseeable future.
Crawford & Company (CRD.B)
Crawford & Company contracts with insurers to manage and process claims for property damage and business interruptions, which spike significantly after major storms.
The increased demand for claims adjusters during such times could bolster Crawford’s financial performance.
The company has also been at the forefront of adopting emerging technologies, including using aerial drones to photograph storm-damaged properties, allowing adjusters to begin working on claims earlier.
Gulf Island Fabrication (GIFI)
There are thousands of offshore oil platforms in the Gulf of Mexico, and when they are damaged in storms, someone has to fix them.
Gulf Island Fabrication builds, repairs, and maintains steel structures and other components used in offshore rigs, among other services for the energy and industrial sectors.
Damaged platforms and coastal facilities can take years to repair or replace, so the company can stay busy well beyond the immediate recovery phase.
Legacy Housing Corporation (LEGH)
Legacy Housing builds, sells, and finances manufactured homes and tiny houses, primarily in rural areas.
Manufactured homes offer a fast and cost-effective way to address the housing needs of displaced residents, positioning Legacy favorably in the aftermath of a storm.
Haverty Furniture Companies (HVT)
Haverty Furniture is a large retail chain that sells residential furniture and accessories, primarily in the South.
When homeowners need to replace furniture that gets damaged or destroyed in a storm, furniture retailers often see sales rise.
Because Haverty has locations throughout regions that face the highest risk of hurricanes, the company is well-situated for steady business in the years ahead.
Great Lakes Dredge & Dock Corporation (GLDD)
Great Lakes Dredge & Dock Corporation provides dredging services, which include maintaining and deepening shipping channels and coastal protection projects.
Hurricanes often cause significant erosion and sediment displacement in coastal and harbor areas, increasing the need for dredging services to restore navigable waterways and protect coastlines.
This boosts demand for Great Lakes Dredge & Dock’s services.
Quanta Services (PWR)
Quanta Services offers specialty contracting services, including infrastructure solutions for the electric power, oil and gas, and telecommunications industries.
Hurricanes frequently cause widespread damage to electrical grids and telecommunications infrastructure.
Quanta Services is likely to see an uptick in demand for its repair and rebuilding services as utilities and telecom companies work to restore service.
As we navigate increasingly turbulent weather patterns, it is essential for investors to consider how natural disasters impact the stock market and the broader economy.
The companies highlighted in this article represent a diverse array of industries that are crucial in the wake of hurricanes, setting them up for success in a future where rebuilding and resiliency become recurring themes.
These stocks also have strong fundamentals that extend beyond their direct involvement in hurricane recovery.
Their roles in addressing broader infrastructural and housing needs, coupled with their innovative approaches to emerging challenges, make them good candidates for sustained growth.
(Peter Ricchiuti is a Finance Professor at Tulane University’s A.B. Freeman School of Business. Views are his own.)
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