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 CVS Health Corporation (NYSE:CVS) 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 row of shelves in a retail pharmacy, demonstrating the variety of drugs and over-the-counter products.
CVS Health Corporation (NYSE:CVS)
Number of Hedge Fund Holders: 60
CVS Health Corporation (NYSE:CVS) is a diversified healthcare company providing health solutions across the United States. It operates through three main segments: Health Care Benefits, Health Services, and Pharmacy & Consumer Wellness. With its expansive presence and integrated healthcare offerings, CVS Health Corporation (NYSE:CVS) is a robust player in the healthcare industry, making it a relevant inclusion in the list of the best hurricane and natural disaster stocks to buy. The company’s wide array of healthcare services and extensive retail presence position it well to respond to increased demand during natural disasters, where access to healthcare, medications, and essential supplies becomes critical.
In the second quarter of 2024,CVS Health Corporation (NYSE:CVS) beat analyst expectations by posting earnings per share (EPS) of $1.83 compared to an estimated $1.73. This performance highlights the company’s solid financial standing, supported by revenues of over $91 billion for the quarter and $8 billion in operating cash flow for the first half of 2024. Additionally, CVS Health Corporation (NYSE:CVS) has raised its full-year 2024 adjusted EPS guidance to a range of $6.40 to $6.55, reflecting its confidence in continued business strength despite challenges in certain segments.
CVS Health Corporation (NYSE:CVS) core business segments reported strong performance. The Health Services segment generated revenues of more than $42 billion and delivered $1.9 billion in adjusted operating income. The company also expanded its pharmacy market share to a record 27.2%. This growth is partly attributed to the successful launch of CVS CostVantage and the implementation of its biosimilar strategy, which delivered approximately $400 million in net savings for clients. Moreover, CVS Health Corporation (NYSE:CVS) focus on innovative pharmacy models and cost management strategies, like TrueCost, positions it well for long-term profitability.
The company also saw a rise in hedge fund interest, with 60 hedge funds holding stakes in CVS Health Corporation (NYSE:CVS) as of Q2 2024, compared to 54 in the previous quarter, indicating growing confidence from institutional investors. With strong fundamentals, increased market share, and a diversified business model, CVS Health Corporation (NYSE:CVS) is well-positioned to continue thriving and supporting communities during natural disasters, making it a compelling stock for investors seeking stability in uncertain times.
Ariel Global Fund stated the following regarding CVS Health Corporation (NYSE:CVS) in its Q2 2024 investor letter:
“American healthcare company, CVS Health Corporation (NYSE:CVS), also declined following disappointing earnings results and a subsequent reduction in full year guidance. The miss was primarily due to increased utilization of Medicare Advantage plans and weakness in the health services segment driven by the loss of a large client and continued pharmacy client price improvements. In response, management reiterated its focus on improving margins and enhancing its positioning in Medicare Advantage. CVS believes the program can remain an attractive business for Aetna and CVS Health over time and will construct its bid for 2025 as a multi-year repricing opportunity across plan level benefits. Meanwhile, CVS continues to return capital to shareholders through dividends and a recent accelerated share repurchase transaction.”
Overall, CVS ranks 5th on our list of Best Hurricane and Natural Disaster Stocks To Buy Now. While we acknowledge the potential of CVS 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 CVS 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.