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 3M Company (NYSE:MMM) 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 specialized industrial laboratory, filled with high-tech machinery for producing abrasives.
3M Company (NYSE:MMM)
Number of Hedge Fund Holders: 66
3M Company (NYSE:MMM) is a diversified technology leader with a wide-ranging portfolio of products and solutions, positioning it as a critical player in hurricane and natural disaster preparedness. Established in 1902 and headquartered in Saint Paul, Minnesota, 3M Company (NYSE:MMM) operates globally, delivering essential safety and industrial products, including abrasives, adhesive solutions, and protective equipment that can be vital during natural disasters. As the company navigates significant transformation and focuses on driving organic growth, its robust financial performance makes it an attractive investment opportunity in this sector.
In the second quarter of 2024, 3M Company (NYSE:MMM) reported earnings per share (EPS) of $1.93, exceeding expectations of $1.68, representing a 39% increase year-over-year. The company’s organic revenue growth was 1%, and adjusted free cash flow reached $1.2 billion, demonstrating an impressive conversion rate of 109%. The company’s operating margins expanded by 440 basis points year-on-year to 21.6%, reflecting strong operational discipline and productivity improvements. These metrics underscore 3M Company (NYSE:MMM) capacity to manage costs effectively while generating significant cash flow.
Notably, 3M Company (NYSE:MMM) has shown resilience amidst a challenging market landscape, particularly in its electronics and industrial segments, which are poised for growth due to increasing demand for disaster recovery solutions. As the company transitions from a healthcare-centric focus, it emphasizes the need for innovation in its core product lines, aiming to rejuvenate aging products while capitalizing on emerging markets like auto electrification and industrial automation.
With 66 hedge fund holders as of Q2 2024, up from 64 in the previous quarter, investor interest in 3M remains strong. This uptick in institutional support indicates confidence in the company’s strategic direction and financial health. As 3M Company (NYSE:MMM) continues to execute its operational excellence strategy, addressing supply chain complexities, and leveraging its innovation capabilities, it is well-positioned for sustained growth. The company’s ongoing commitment to capital efficiency, including share buybacks and prudent investments, further enhances its attractiveness as a top contender in the hurricane and natural disaster stock category.
Overall, MMM ranks 3rd on our list of Best Hurricane and Natural Disaster Stocks To Buy Now. While we acknowledge the potential of MMM 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 MMM 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.