Natural disasters are no joking matter. The Carolinas are experiencing one of the worst storms in recent memory, and are benefitting from the hurricane losing quite a bit of power, mitigating some damage.
Even though Wall Street (the actual street) is feeling the effects with increased rainfall in NYC, the effects of the $30-$60 billion dollars worth in damage can be felt inside on the trading floor.
Sectors to watch impacted from the Hurricane
REIT’s impacted by Hurricane Florence could feel a significant pinch, as businesses could be out of operations for months, and flooded homes could force people to relocate, sometimes permanently. One of the more susceptible REIT’s with exposure in low lying areas and prone to flooding is Highwoods Properties ($HIW). With significant exposure in the Raleigh area, $HIW, as well as American Finance Trust ($AFIN) and EastGroup Properties ($EGP), revenue could take a hit, and it’s unclear how much of that would be covered by insurance.
The tradeoff however, is if the REIT properties do experience a loss, if the investments include older properties (say 20-30 year old+ properties), you could see an upgrade in the assets, and a rebuild with a brand new building, actually putting the REIT further ahead than if there was no storm. Keep an eye on loss reporting, and what assets were impacted, because a loss in the short term could mean a newer building and the ability to charge higher rents very soon.
Hotels / Self-Storage
*** SPECIAL ALERT -- May 10, 2020 -- Motley Fool Stock Picks On FIRE! ****The recent Motley Fool stocks picks, even with this COVID crisis, are STILL performing well and beating the SP500! Here are some of their most recent picks and their performance:
- Shopify (SHOP) – April 2, 2020 pick and it is already up 90%
- Zoom Video (ZM) – March 19, 2020 pick and it is already up 16%
- DexCom (DXCM) picked Feb 20, 2020 right before the market crashed and it is still up 17%
- Tesla (TSLA) picked January 2, 2020 before the crash and it is up 77% compared to the SP500 -12% so it is ahead of the market by 89%
- HubSpot (HUBS) picked December 5, 2019 and it is up 4%
- Netflix (NFLX) picked November 21, 2019 and it is up 37%
- Trade Desk (TTD) picked November 11, 2019 and up 50%
- Zoom Video originally picked Oct 3 and it is up 87%
- SolarEdge (SEDG) picked September 19, 2019 and it is up 20%
- Zoom was also picked October 3, 2019 and it is up 95% since then.
Normally the Fool service is priced at $199 per year but they are currently offering it for just $99/year if you click this link.
Hurry! Order now so you will get their next stock pick! Here is the expected schedule of release dates for their stock picks...:
- June 4 - Tom's New Recommendation
- June 11 - Tom's New Best Buys Now
- June 18 - David's New Recommendation
- June 25 - David New Best Buys Now
Look for your lower cost extended stay hotels near and around flood hit areas to be full and at 100% occupancy for an extended period of time. This bill could be picked up by the insurance company itself, or even the Red Cross, effectively guaranteeing payment in large chunks.
Self-storage providers such as Public Storage ($PSA), Extra Space Storage ($EXR), and East Coast focus Global Self Storage ($SELF) all could stand to benefit from extended contracts and new customers while homes are being rebuilt and precious items need to be stored.
Healthcare and insurance stocks could also be an interesting play, as companies like LifePoint Health ($LPNT), Community Health Systems ($CYH), Tenet Healthcare ($THC), and HCA Healthcare ($HCA) all fave facilities in the area. Expect an influx of storm victims, and also increased costs from evacuation efforts and staff overtime in the short term reporting periods.
Home Improvement / Repair
Home Improvement and related industry stocks for construction could see a boom from the need for supplies and materials. It is still yet to be seen how much of the $30-$60 billion is damage vs. economic loss, but suffice to day rebuilding efforts and remediation efforts will be quite sizable.
Look at stocks such as Home Depot ($HD), Lowes ($LOW), and Herc Holdings ($HRI) to see gains in the next few quarters from sales bumps due to purchase and leasing.
The Carolinas and the impacted areas are known for farming, and already we are hearing reported damage to tobacco crops, rumored to be a 20% loss on the crops from wind damage. Look to Altria ($MO) and Phillip Morris ($PM) to have (small) interruptions in supply chain.
Other industries hit are corn ($CORN), wheat ($WEAT) ($GRU), sugar ($SGG) ($CANE), soybeans ($SOYB), cotton ($BALB), and livestock ($COW) ($UBC).
Stay safe during Hurricane Florence, and after
We sincerely hope all make it out of this hurricane with life and limb intact, the impact is minimal, and everyone from the family pet to those in intensive care in a hospital make it out alive. This post is to be seen not as profiting from a natural disaster, but to illustrate how many industries are impacted by such a natural disaster.