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How to Prepare for Hurricane Season With ETFs & Stocks
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The first major storm of this year – Hurricane Florence – started brewing in the Atlantic. The threat has been accredited the Category 4 status (notably category 5 indicates the strongest), meaning winds are likely to blow at speed as fast as 130 mph and can ravage property and lives.
Though the hurricane is expected to weaken in the coming days, recent computer-simulated predictions show there's a possibility that Florence could hit southeastern coasts by late this week. Apart from this, storm Gordon hit the Gulf Coast region on Sep 5, after it lashed on the west of the Alabama-Mississippi border.
Whatever the case, investors can keep track of the below-mentioned sector ETFs and stocks before every Atlantic Hurricane season, which spans from June to November.
Likely Gainers from Hurricanes
Home Retailers
The condition of houses in an area ravaged by a massive storm can well be imagined. So, home improvement retailers like Home Depot Inc. (HD - Free Report) and Lowe's Companies Inc. (LOW - Free Report) may benefit this season depending on the strength of the storm. ETFs like Consumer Discretionary Select Sector SPDR FundXLY should also benefit (read: Home Retailer ETFs Set to Gain After Harvey).
Infrastructure
This should shower gains on infrastructure stocks as re-building will push up their demand. So, companies dealing in building materials should see a surge. The Materials Select Sector SPDR Fund (XLB - Free Report) , SPDR S&P Homebuilders ETF (XHB - Free Report) and Invesco Dynamic Building & ConstructionPKB have high chances of outperforming.
Likely Losers from Hurricanes
Insurance
If destruction is massive, insured losses could be as high. Property and casualty insurance companies may thus be hit hard as these are likely to shell out handsomely on claims in such catastrophic storms. Insurance stocks normally decline after such events. Shares of property and casualty homeowners’ insurance companies like Universal Insurance Holdings Inc. (UVE - Free Report) and Heritage Insurance Holdings Inc. (HRTG - Free Report) .
iShares U.S. Insurance ETF IAK should also be tracked closely this season. Having said all, investors should note that the sector performs well in rising rate environment, which currently is the case in the United States.
Transportation
Severe hurricanes could roil rail and container activity, and crush infrastructure for transportation. So, airline companies like American Airlines (AAL - Free Report) , JetBlue (JBLU - Free Report) and Southwest (LUV) and US Global Jets ETFJETS could feel the pinch. Transportation ETFs like SPDR S&P Transportation ETF XTNalso deserve attention (read: Airlines ETF Gains in 1-Month Period Despite Mixed Results).
Restaurants
Restaurants may see considerable sales reduction and destruction due to hurricanes. Per an article published on MarketWatch, Morgan Stanley’s analysis shows that some restaurants have considerable exposure to hurricane prone areas. These are the likes of Fiesta Restaurant Group Inc. , Dunkin’ Brands Group Inc. , Bloomin' Brands (BLMN - Free Report) and BJ's Restaurants (BJRI - Free Report) .
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How to Prepare for Hurricane Season With ETFs & Stocks
The first major storm of this year – Hurricane Florence – started brewing in the Atlantic. The threat has been accredited the Category 4 status (notably category 5 indicates the strongest), meaning winds are likely to blow at speed as fast as 130 mph and can ravage property and lives.
Though the hurricane is expected to weaken in the coming days, recent computer-simulated predictions show there's a possibility that Florence could hit southeastern coasts by late this week. Apart from this, storm Gordon hit the Gulf Coast region on Sep 5, after it lashed on the west of the Alabama-Mississippi border.
Whatever the case, investors can keep track of the below-mentioned sector ETFs and stocks before every Atlantic Hurricane season, which spans from June to November.
Likely Gainers from Hurricanes
Home Retailers
The condition of houses in an area ravaged by a massive storm can well be imagined. So, home improvement retailers like Home Depot Inc. (HD - Free Report) and Lowe's Companies Inc. (LOW - Free Report) may benefit this season depending on the strength of the storm. ETFs like Consumer Discretionary Select Sector SPDR Fund XLY should also benefit (read: Home Retailer ETFs Set to Gain After Harvey).
Infrastructure
This should shower gains on infrastructure stocks as re-building will push up their demand. So, companies dealing in building materials should see a surge. The Materials Select Sector SPDR Fund (XLB - Free Report) , SPDR S&P Homebuilders ETF (XHB - Free Report) and Invesco Dynamic Building & Construction PKB have high chances of outperforming.
Likely Losers from Hurricanes
Insurance
If destruction is massive, insured losses could be as high. Property and casualty insurance companies may thus be hit hard as these are likely to shell out handsomely on claims in such catastrophic storms. Insurance stocks normally decline after such events. Shares of property and casualty homeowners’ insurance companies like Universal Insurance Holdings Inc. (UVE - Free Report) and Heritage Insurance Holdings Inc. (HRTG - Free Report) .
iShares U.S. Insurance ETF IAK should also be tracked closely this season. Having said all, investors should note that the sector performs well in rising rate environment, which currently is the case in the United States.
Transportation
Severe hurricanes could roil rail and container activity, and crush infrastructure for transportation. So, airline companies like American Airlines (AAL - Free Report) , JetBlue (JBLU - Free Report) and Southwest (LUV) and US Global Jets ETF JETS could feel the pinch. Transportation ETFs like SPDR S&P Transportation ETF XTN also deserve attention (read: Airlines ETF Gains in 1-Month Period Despite Mixed Results).
Restaurants
Restaurants may see considerable sales reduction and destruction due to hurricanes. Per an article published on MarketWatch, Morgan Stanley’s analysis shows that some restaurants have considerable exposure to hurricane prone areas. These are the likes of Fiesta Restaurant Group Inc. , Dunkin’ Brands Group Inc. , Bloomin' Brands (BLMN - Free Report) and BJ's Restaurants (BJRI - Free Report) .
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>