We recently published a list of 10 Best Hurricane and Natural Disaster Stocks To Buy Now. In this article, we are going to take a look at where Copart, Inc. (NASDAQ:CPRT) stands against other best hurricane and natural disaster stocks to buy now.
The 2024 hurricane season is shaping up to be a highly active one, especially in the North Atlantic. Forecasts suggest that the number of tropical cyclones this year could exceed the long-term average. Although it’s difficult to predict how many storms will make landfall and where they will hit, a higher number of storms increases the chances of multiple landfalls, posing a significant risk to the Gulf of Mexico and Caribbean Sea regions.
Leading research institutes expect approximately 23 named cyclones in the North Atlantic this year, with 11 potentially developing into hurricanes. Of these, five could become severe hurricanes with wind speeds exceeding 110 mph. These estimates are considerably higher than the long-term average observed between 1950 and 2023, which was 12 named storms, 6 hurricanes, and nearly 3 severe hurricanes each season.
Sea surface temperatures in the tropical North Atlantic are currently at record highs, between 0.5 and 1.0°C above the historical average, creating conditions favorable for hurricane development. Furthermore, the natural climate oscillation ENSO (El Niño/Southern Oscillation) is expected to shift to a La Niña phase. This shift typically reduces high-altitude wind shear, which in turn makes it easier for tropical cyclones to develop and intensify.
Given these factors, the likelihood of severe hurricanes making landfall this season is heightened. This means that companies involved in infrastructure, construction, insurance, and emergency response could see increased demand for their products and services. Hurricanes not only cause billions of dollars in property damage but also disrupt various sectors, from utilities and energy to real estate and transportation. Thus, investing in companies that specialize in disaster recovery, property restoration, and related services could be a strategic move.
In this article, we will explore the ten best hurricane and natural disaster stocks to buy now. These companies are well-positioned to benefit from the potential increase in hurricane activity and the demand for services that follow in the wake of natural disasters. Whether through providing emergency equipment, offering insurance coverage, or assisting in rebuilding efforts, these stocks could present an opportunity for investors looking to hedge against the financial impacts of natural disasters.
Sources like Munich Re, the World Meteorological Organization (WMO), and the International Labour Organization (ILO) have provided valuable insights into the 2024 hurricane season, highlighting the increased risks and potential economic impacts. With that in mind, let’s dive into our list of the best stocks to consider for this hurricane season.
Our Methodology
The companies featured in this list are known to experience increased demand following hurricanes and natural disasters. To provide prospective investors with valuable insights, we’ve also highlighted key business fundamentals and analyst ratings for these stocks. Additionally, we reviewed data from approximately 912 elite hedge funds tracked by Insider Monkey during the second quarter of 2024 to determine hedge fund ownership for each company. From this dataset, we selected the top ten stocks most favored by institutional investors and ranked them in ascending order based on the number of hedge funds holding stakes in these firms as of Q2 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A busy car auction being held at a leading car dealership, buyers and sellers engaging in active bidding.
Copart, Inc. (NASDAQ:CPRT)
Number of Hedge Fund Holders: 50
Copart, Inc. (NASDAQ:CPRT) is a leading provider of online vehicle auctions and remarketing services across multiple regions, including the United States, Canada, and the United Kingdom. As a company deeply integrated in the insurance and vehicle salvage industry, Copart, Inc. (NASDAQ:CPRT) is well-positioned to benefit from the rising frequency of natural disasters and hurricanes, which often lead to higher total loss vehicle rates. This makes the stock a strategic addition to a list of hurricane and natural disaster-related stocks.
The company’s wide range of services, such as vehicle inspections, transportation, title processing, and salvage estimation, are indispensable for insurance companies when processing claims for vehicles damaged due to natural disasters. Copart’s Title Express service, which streamlines the title procurement process for insurers, has gained significant traction, demonstrating its critical role in the insurance ecosystem. During the fourth fiscal quarter of 2024, Copart reported a 6% year-over-year increase in insurance vehicle volumes and a 20.4% increase in non-insurance volume growth, highlighting the company’s ability to grow across various segments.
Although Copart, Inc. (NASDAQ:CPRT) missed its earnings expectations in the recent quarter—reporting earnings per share (EPS) of $0.33 against estimates of $0.36—the company’s fundamentals remain robust. Copart’s total revenue for fiscal 2024 was $4.2 billion, representing a 10% year-over-year growth. The company’s international business also saw substantial expansion, with unit growth of 17% for Q4 and 21% for the full year. Meanwhile, U.S. service revenue increased by 10% for the year, supported by strong growth in both insurance and non-insurance units.
Additionally, Copart, Inc. (NASDAQ:CPRT) has become a popular choice among institutional investors, with hedge fund interest in the stock increasing to 50 holders in Q2 2024, up from 41 in the previous quarter. This reflects growing investor confidence in the company’s long-term potential. The expansion of its real estate portfolio and strategic partnerships, such as its collaboration with Purple Wave, also position Copart to continue capitalizing on industry trends and natural disaster-related surges in vehicle volumes. Overall, Copart, Inc. (NASDAQ:CPRT) ability to provide critical services to the insurance industry during natural disasters, combined with its solid financial performance and rising hedge fund interest, make it a compelling stock to consider in this category.
Conestoga Capital Advisors Mid-Cap Strategy stated the following regarding Copart, Inc. (NASDAQ:CPRT) in its first quarter 2024 investor letter:
“Copart, Inc. (NASDAQ:CPRT): CPRT is the leading provider of salvage auctions in the US, Canada and the UK. The company reported a solid quarter of unit volume improvement and continued margin gains. We believe favorable trends should improve as lower used car prices will drive a higher total loss rate, which results in more damaged vehicles going to Copart auctions.”
Overall, CPRT ranks 6th on our list of Best Hurricane and Natural Disaster Stocks To Buy Now. While we acknowledge the potential of CPRT to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CPRT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.