Dividends and US stocks to watch as Hurricane Florence approaches

Last Fridaythe first of the Hurricanes to hit landfall was a huge one. Florence is the size of Hugo which caused $9 billion in damage when it hit in 1989. First you worry about the people, but afterwards when people return to their homes and jobs, then the other variable is how do you make money from the stock market?

The Hurricane does two things – it will bring in a lot of rain so that means flooding and basements will get wet and need to dry out. It also means creeks, rivers will rise and likely mean flooding along the banks. The other aspect is storm surge – the hurricane sucks the water back and when it hits landfall the water comes rushing in which means flooding. Eventually the Hurricane leaves the area the water will go back to what is considered normal. Given Florence is a very large storm, storm surges of greater than 5 feet are expected or the water will rise at least 5 feet, maybe more.

An interesting number given by former Governor Chris Christie speaking on the ABC Sunday news show This Week with George Stephanopoulos was: when Hurricane Sandy hit New Jersey, 365,000 homes were lost due to flooding which made homes wet which causes mold which means they need to be replaced. Ask your yourself to replace those homes what needs to be done?

According to an article by Reuters there are some relatively easy things to consider:

Car rentals – when the Governors of the states affected issues a please leave order, people need transportation out. Car rentals, trains, buses, and private vehicles are all used to clog the highway and get out of town. Prior to the storm – Hertz and Avis are up 3%.

Freight – truck and trains needed to move goods and supplies. Typically with increase demand, prices rise and trucking companies XPO Logistics, USA Truck, JB Hunt, and Old Dominion Freight were up rom 1.6 yo 5.4%.

Home Improvement – the biggest stores are Home Depot and Lowe’s both were up 2.5%

Insurance – after the storm leaves, the insurance companies will have to pay insurance claims. This is when you need to do your homework because not all insurance companies have the same market share in the region affected. Allstate has a 10.5% share in South Carolina and 6.6% in North Carolina, the company was down 1.9%. Shares of other insurance companies were down 1%.

Building supplies – there is work to be done to get ready for the Hurricane and after the Hurricane. Shares of Beacon Roofing Supply were up 8.2%. Shares of generator Generac Holdings were up 6.6%

Linking to dividend paying stocks, when a Hurricane comes, the first concern is for the people and getting them to safety. After that task has been accomplished, you must do some homework to see the regional affects on corporations. As much as most companies wish to be diversified, many are more heavily attached to one region or another and that tends to serve them well. When a natural disaster comes such as a Hurricane, it is important to consider what normal people have to do and then some companies should and will benefit. One should be aware many companies have plans in place – when a Hurricane happens they are ready to deliver goods and services to the area or they move supplies just outside the affected area until the water goes down. For example, Wal-mart stocks up on water and pop tarts. If the power is down, people still need to eat something.

There are more questions than answers, till the next time – to raising questions.

 

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