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Residents across four states on the east coast are bracing for impact as Hurricane Matthew continues to make its way toward the U.S. The storm headed toward Florida on Wednesday after causing severe devastation across Haiti and bringing heavy rainfall and strong winds to the entire Caribbean region.

According to forecasts, the category 4 hurricane will hit Florida, South and North Carolina, and Georgia sometime between Thursday evening and Friday. Not just ordinary citizens, several companies may also be affected by the event.

Property & Casualty Insurers Decline

Expected to hit landfall before Saturday morning, the storm has been described as particularly dangerous by the hurricane center. Governors across the four states have already begun evacuations, anticipating the severe destruction that it is likely to cause. Endless queues for gas, sellouts for emergency materials at stores and a massive gridlock on highways are underscoring the seriousness for which preparations are underway.

As a result, property and casualty insurance companies felt the heat on Tuesday. Chubb Limited (CB - Free Report) declined 1%, while The Allstate Corporation (ALL - Free Report) and Progressive Corp. (PGR - Free Report) each lost 0.8%. Both Chubb and Progressive Corp have a Zacks Rank #4 (Sell) while Allstate has a Zacks Rank #3 (Hold).

Meanwhile, Zacks Rank #3 rated The Travelers Companies, Inc. (TRV - Free Report) lost 0.6% and Zacks Rank #2 (Buy) rated American International Group, Inc. (AIG - Free Report) ended nearly flat. Analysts at Zacks #2 rated J.P. Morgan (JPM - Free Report) have said that it is advisable to wait until the storm passes before buying stocks from the sector. This is because such stocks often bounce back if it is learnt that the extent of damage is not as severe as anticipated.

Backup Power Gains, Power Companies Watchful

Shares of Zacks Rank #3 Generac Holdings Inc. GNRC gained 5.7% on Tuesday. With power outages widely expected across four states, it comes as no surprise that the manufacturer of backup generators had chalked out an advance. Generac has emphasized that in the current situation, backup power is an essential item. It is urging homeowners to purchase its portable generators in order to maintain power supply if utilities fail in the wake of the storm.

On the utilities front, Florida Power & Light Company has said that it is well prepared to face the impact of Hurricane Mathew.  The company has spent close to $2 billion over the last 10 years on beefing up its grid. This includes new lines, poles and the latest technology designed to withstand the force of such a storm.

Despite such upgrades, the company has said that heavy winds could still pull down power lines. Florida Power and Light is the principal subsidiary of NextEra Energy, Inc. (NEE - Free Report) which lost 1.8% on Tuesday. The stock has a Zacks Rank #3.  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Airlines, Cruise Lines Affected

By Tuesday, air travel between southern Florida and the Caribbean had been affected. A few airlines were suspending flights as a preemptive measure to ensure the security of their passengers. Others have made offers to passengers who are rescheduling their travel dates. These passengers will be able to do so without paying any additional charges.

The maximum number of cancellations was made by Zacks #3 American Airlines Group Inc. AAL. Zacks Rank #4 Southwest Airlines Co. (LUV - Free Report) and Zacks Rank #2 JetBlue Airways Corporation (JBLU - Free Report) also suspended some flights.

Additionally, the financial performance of cruise lines such as Zacks Rank #3 Carnival Corporation (CCL - Free Report) will also be impacted by Hurricane Matthew. Travel plans will undergo changes and cruise lines will be forced to offer discounts and refunds by way of compensation. This will hurt revenues and ultimately depress bottom lines. The Zacks Rank #2 Royal Caribbean Cruises Ltd. RCL has already said that it will have to reroute several ships in order to cope with the impending storm.

Hurricane Likely to Hurt Disney

Zacks Rank #3 The Walt Disney Company’s (DIS - Free Report) Disney Cruise Line has also been affected by the imminent storm. However, the company’s theme park in Florida, The Walt Disney World Resort, is likely to face an even bigger threat from Hurricane Matthew. As per policies instituted nearly a decade ago, Disney will reschedule vacations without any charge and refund cancellations in case these are made within seven days of a hurricane warning in Orlando or the customer’s hometown. The same rules apply to its timeshare resorts located at Vero Beach and Hilton Head Island.

Other theme parks in the region including Comcast Corporation’s (CMCSA - Free Report) Universal Orlando and SeaWorld Entertainment, Inc. SEAS will also be impacted by these events. Both these stocks carry a Zacks Rank #3. While Universal’s policies related to refunds are similar to Disney’s, SeaWorld’s rules regarding this issue do not specify that all the conditions that have to satisfied by a customer in order to be eligible for a free refund. 

Conclusion

Despite the preparations made across the four states likely to be affected, Hurricane Matthew may still leave much destruction in its wake. Several companies are likely to be hurt as a result. It remains to be seen whether the impact is as much as is being feared or whether the storm rolls ahead without causing much damage.

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