How to Trade the Upcoming Hurricane Season – 4/7

Hurricane season hasn’t started just yet.

But forecasters are already saying the 2024 season could see a record number of storms.

“We’re coming out with a very aggressive forecast: 23 named storms, 11 hurricanes and five major hurricanes,” said Phil Klotzbach, a senior research scientist in the atmospheric science department at Colorado State University. “And even that is so undercutting all the model guidance,” as quoted by USA Today. “Everything is leaning toward an extremely active season: still record warm Atlantic water temperatures and a pretty rapid transition over to La Niña.”

That being said, we should start looking at hurricane-related stocks – most of which turn higher during hurricane seasons.

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Company: Generac Holdings (GNRC)

Look to generator stocks like Generac, for example. The stock typically benefits from surging demand for generators in preparation for potential power outages.

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There are also home improvement stocks.

Company: Home Depot (HD), Lowe’s (LOW)

Home Depot (HD) and Lowe’s (LOW) historically stand to benefit from increased sales of plywood and other home improvement goods.  This segment is “naturally positively exposed to preparation and recovery efforts,” says Morgan Stanley.  These “typically see a boost in sales post-storm as damaged property is repaired.”

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Company: Xylem (XYL)

Xylem has a history of running higher in hurricane seasons too.  It works with “cities, counties and companies to create contingency plans that map out emergency response strategies and identify the required pumping equipment to react to natural disasters.”

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