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 The Home Depot, Inc. (NYSE:HD) 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 home improvement store overflowing with a variety of products and supplies.
The Home Depot, Inc. (NYSE:HD)
Number of Hedge Fund Holders: 86
The Home Depot, Inc. (NYSE:HD) is a leading home improvement retailer with a robust presence both in the United States and internationally. The company’s extensive product offerings encompass building materials, home improvement goods, and installation services, making it an essential player in the hurricane and natural disaster stocks category. As natural disasters increase in frequency and intensity, the demand for home repair and renovation products and services is likely to rise, positioning The Home Depot, Inc. (NYSE:HD) for sustained growth.
In its Q2 2024 earnings call, The Home Depot, Inc. (NYSE:HD) reported earnings per share (EPS) of $4.67, exceeding analyst expectations of $4.53, showcasing the company’s resilience in a challenging economic environment. Despite a reported sales decline of 3.3% from the previous year, the company generated $43.2 billion in sales, indicating strong operational capabilities and a loyal customer base. This decline was largely influenced by higher interest rates and macroeconomic uncertainties that affected consumer spending across home improvement projects, particularly during the softer spring season impacted by extreme weather.
Notably, The Home Depot, Inc. (NYSE:HD) has been proactive in expanding its market share, currently holding about 17% of the $1 trillion home improvement market. The recent acquisition of SRS Distribution adds significant value to its product offerings, particularly in roofing and landscaping, allowing the company to enhance its services and drive cross-selling opportunities. The integration of SRS is expected to bolster revenue growth through innovative product offerings and improved customer credit options.
The company’s online sales also saw an increase of approximately 4%, indicating a successful transition toward digital platforms, which is crucial for capturing the growing e-commerce segment. The improvement in fulfillment options, including a partnership with Instacart, further enhances the customer shopping experience.
Additionally, there are 86 hedge fund holders as of Q2 2024, up from 70 in the previous quarter, signaling growing institutional confidence in The Home Depot, Inc. (NYSE:HD). This increasing institutional interest reflects a positive outlook for the stock, reinforcing its potential as a strong contender in the hurricane and natural disaster sector. With its strategic investments and commitment to customer service, The Home Depot, Inc. (NYSE:HD) is well-positioned for long-term growth and profitability.
Diamond Hill Large Cap Concentrated Strategy stated the following regarding The Home Depot, Inc. (NYSE:HD) in its Q2 2024 investor letter:
“Other bottom Q2 contributors included Caterpillar and The Home Depot, Inc. (NYSE:HD). Similarly, home improvement retailer Home Depot faces growing concerns about the consumer spending environment — particularly for home improvement expenditures. However, we believe the company’s long-term prospects and multi-year fundamental outlook are unchanged.”
Overall, HD ranks 2nd on our list of Best Hurricane and Natural Disaster Stocks To Buy Now. While we acknowledge the potential of HD 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 HD 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.