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 NOV Inc. (NYSE:NOV) 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).
An engineer inspecting a complete set of oil and gas components.
NOV Inc. (NYSE:NOV)
Number of Hedge Fund Holders: 29
NOV Inc. (NYSE:NOV), a global leader in the design and manufacturing of systems and products for oil and gas drilling, as well as industrial and renewable energy sectors, deserves a spot among the top hurricane and natural disaster stocks due to its essential role in providing resilient infrastructure and technologies. The company’s robust portfolio includes drilling equipment, production technologies, and hydraulic fracture stimulation tools, making it a key player in supporting energy production and offshore development, which are critical during and after natural disasters when energy stability is crucial.
For the second quarter of 2024, NOV Inc. (NYSE:NOV) posted strong financial results, highlighting the company’s growth and operational resilience. The firm reported revenues of $2.22 billion, an increase of 6% compared to the same period last year. The company also achieved a net income of $226 million, or $0.57 per diluted share, which represented an impressive year-over-year increase of $0.18 per share. NOV Inc. (NYSE:NOV) EBITDA improved by 15% to reach $281 million, with EBITDA margins expanding to 12.7%, driven by cost reductions and improved revenue mix.
NOV Inc. (NYSE:NOV) success is largely attributable to its strategic focus on high-margin international and offshore markets. The company witnessed a surge in bookings for flexible pipe solutions for deepwater FPSO developments and well intervention equipment for both offshore and international markets. The book-to-bill ratio for the quarter was nearly 180%, indicating strong demand for NOV Inc. (NYSE:NOV) offerings. Additionally, NOV Inc. (NYSE:NOV) cost-saving initiatives have resulted in $75 million of annualized savings, positioning the company to sustain profitability even amid challenging North American market conditions.
The company has also implemented advanced AI solutions to enhance operational efficiency across its manufacturing facilities, optimizing capacity and reducing production costs. This strategic utilization of technology has bolstered NOV Inc. (NYSE:NOV) competitive edge in the energy equipment sector.
As of Q2 2024, 29 hedge funds hold positions in NOV Inc. (NYSE:NOV), slightly down from 33 in the previous quarter, reflecting a modest dip in institutional interest. However, with stable cash flows, strong EBITDA margins, and promising international growth prospects, NOV Inc. (NYSE:NOV) remains a compelling investment in the energy sector, particularly for those looking to benefit from the resilience and recovery associated with hurricane and natural disaster impacts.
Overall, NOV ranks 10th on our list of Best Hurricane and Natural Disaster Stocks To Buy Now. While we acknowledge the potential of NOV 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 NOV 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.