With hurricane season about to start, key stocks in the home-improvement and consumer-staples industries could present opportunities, according to investing-information website Trading.biz.
Hurricane season in the U.S. normally begins June 1 and runs through Nov. 30. There are no tropical Atlantic cyclones at this time, according to the National Oceanic and Atmospheric Administration.
However, researchers at Colorado State University have forecast an “extremely active” Atlantic hurricane season this year.
Related: ‘Extremely active’ hurricane season may lead to late-summer surge in gas prices
Set against this backdrop, home-improvement companies such as Home Depot Inc. HD, -1.34% could play an important role in the post-hurricane season by providing materials needed to rebuild, according to Trading.biz. “Home Depot’s market share and price-to-earning ratio make it an ideal investment, especially during and after the hurricane season when the share price is known to appreciate,” Joel Lim, a financial analyst at Trading.biz, said in a statement.
The home-improvement giant’s stock is also reasonably priced, according to Trading.biz. Home Depot shares have fallen 1.9% in 2024, compared with the S&P 500’s SPX gain of 11.6%.
Last week, the Atlanta-based company beat profit estimates in its first-quarter results, but its sales fell slightly short as the spring selling season got off to a delayed start.
Related: Home Depot’s sales fall short of estimates as spring selling season sees delayed start
Other analysts have also cited hurricane-related bumps for Home Depot, as well as its rival Lowe’s Cos. LOW, -0.73%. In 2018, cleanup and rebuilding efforts after Hurricane Isaac increased Home Depot’s sales by $ 377 million, according to D.A. Davidson analyst Michael Baker.
Trading.biz also points to consumer staples as a sector that does well during hurricane season, pointing to the uncertainty associated with natural disasters, which leads people to stock up on essentials like food, water and gas. As a result, retailers like Walmart Inc. WMT, -0.61% often see an increase in stock price due to their role in meeting consumer demands, the investing website says.
“Consumer staples is a winning industry that thrives in every season,” says Lim. “With the hurricane season just a few weeks away, interested investors should consider Walmart stocks for maximum return on investment.”
Related: Walmart’s stock surges to record after a grand-slam earnings report
Walmart’s stock recently enjoyed its best week in two years, boosted by the retail giant’s strong first-quarter earnings. Shares of Walmart are up 23.1% this year.
The 2024 hurricane season may also lead to a late-summer surge in gas prices, analysts warned last month.
Hurricane researchers cite record warm tropical and eastern subtropical Atlantic sea-surface temperatures as a primary factor for their prediction of 11 hurricanes in 2024. “A very warm Atlantic favors an above-average season, since a hurricane’s fuel source is warm ocean water,” Colorado State University’s forecast team said in a statement. “In addition, a warm Atlantic leads to lower atmospheric pressure and a more unstable atmosphere. Both conditions favor hurricanes.”
Ciara Linnane and Myra P. Saefong contributed.