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 Generac Holdings Inc. (NYSE:GNRC) 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 technician in protective gear repairing a huge generator at a power plant.
Generac Holdings Inc. (NYSE:GNRC)
Number of Hedge Fund Holders: 35
Generac Holdings Inc. (NYSE:GNRC) is a leading provider of energy technology products and solutions, making it an essential addition to any list of hurricane and natural disaster stocks. The company specializes in a wide range of products, including residential standby generators, portable generators, energy storage solutions, and backup power systems for both residential and commercial applications. With the increasing frequency of severe weather events, Generac Holdings Inc. (NYSE:GNRC) offerings are positioned to see continued demand as consumers and businesses alike seek to protect themselves from prolonged power outages.
In the second quarter of 2024, Generac Holdings Inc. (NYSE:GNRC) reported revenues of $998 million, which were flat year-over-year. Residential product sales rose by 8% due to robust demand for home standby generators, driven by increased power outage activity following major storms like Hurricane Beryl. Although commercial and industrial (C&I) sales declined by 10%, mainly due to softness in telecom and rental markets, Generac Holdings Inc. (NYSE:GNRC) remains optimistic about long-term growth opportunities. The company’s strategic focus on operational execution and expanding market share within its North American industrial distributor network has been pivotal in maintaining its industry leadership.
Despite missing earnings expectations for the quarter, with an EPS of $0.975 compared to the forecasted $1.24, Generac Holdings Inc. (NYSE:GNRC) gross and adjusted EBITDA margins expanded significantly from the prior year, driven by a favorable sales mix and reduced input costs. The company’s dealer network also grew to approximately 8,900 residential dealers, reflecting a strong distribution model and enhanced market penetration. Moreover, home consultations saw sequential growth, further supported by Generac Holdings Inc. (NYSE:GNRC) initiatives to improve sales lead conversion and optimize lead nurturing practices.
Generac’s recent $35 million investment in Wallbox to develop integrated EV charging solutions further strengthens its position in the growing residential energy management market. In addition, Generac Holdings Inc. (NYSE:GNRC) is expanding its market presence through strategic acquisitions like SunGrid Solutions, enhancing its capabilities in energy storage for C&I applications. The number of hedge funds holding Generac increased to 35 in Q2 2024, compared to 33 in the previous quarter, highlighting increased investor interest.
Overall, Generac Holdings Inc. (NYSE:GNRC) is poised to capitalize on the rising demand for energy resiliency solutions in response to more frequent and severe weather events, making it a strong contender among hurricane and natural disaster stocks to consider for long-term growth.
Diamond Hill Capital Mid Cap Strategy stated the following regarding Generac Holdings Inc. (NYSE:GNRC) in its first quarter 2024 investor letter:
“Though valuations have increased, we continue identifying high-quality companies we believe the market is overlooking. We accordingly initiated four new positions in Q1: Generac Holdings Inc. (NYSE:GNRC), Diamondback Energy (FANG), Johnson Controls International and Humana. Generac Holdings is a leading energy technology solutions manufacturer with a dominant position in residential home standby power. With its strong position in home standby and diverse energy solutions offerings, Generac is well-positioned for growth moving forward as increasing electricity usage and electrical grid instability drive demand for its products. Shares have been pressured over the last couple years as the company has faced inventory-related headwinds and soft near-term demand — giving us an opportunity to initiate a position at what we believe is a compelling discount to intrinsic value.”
Overall, GNRC ranks 7th on our list of Best Hurricane and Natural Disaster Stocks To Buy Now. While we acknowledge the potential of GNRC 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 GNRC 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.