8 Stocks that Benefit from Severe Weather Events

When storms bear down on areas with dense populations, the impact can be severe. But while storms and other severe weather events can cause millions of dollars worth of damage to individuals and companies, some businesses enjoy benefits. For example, engineering firms, home improvement companies, and generator manufacturers often see revenue increases as a direct result of weather events.

While storms rarely result in long-term financial improvements, and companies shouldn't count on them to improve long-term revenue, a business increase during storm season can be enough to shift investor sentiment and cause a rally in stock values.

Key Takeaways

  • Hurricane season puts a variety of businesses and industries at risk if they fall in the path of the storm.
  • While a major storm is devastating for many individuals and companies, a select group of businesses can thrive amid such difficult circumstances.
  • Home improvement companies, such as Home Depot and Lowe's, tend to see strong sales in the days and weeks ahead of and just after a storm.
  • Generator and battery manufacturers tend to see a rise in sales as consumers seek to prepare their homes for the incoming storms.
  • Companies that test and treat water to make sure it's drinkable, as well as engineering firms that help rebuild, tend to see improved sales in the aftermath of a bad storm.

Home Improvement Companies

The Home Depot (HD), Lowe’s (LOW), and Walmart (WMT) are three companies that may see an increase in business in a weather event's aftermath.

These big-box retailers are generally considered to be top picks to buy ahead of a storm for the potential increase in stock value, as they can still see an increase in sales even if a weather event does not have a significant impact. That's because they sell supplies that people need before a storm, including batteries, snow shovels, generators, and various building materials to prepare for the storm.

These companies may see an additional increase in sales post-storm if the damage is significant as consumers purchase materials needed to clean up and rebuild.

The Atlantic hurricane season runs from June 1 through November 30, with the worst stretch occurring in August through late October. 

Generator Companies

Demand for generators increases if a storm results in major power losses. Generator manufacturers like Generac Holdings (GNRC) usually benefit from this. It's one of the largest publicly traded manufacturers of home backup generators, and it was the first company to engineer affordable home standby generators. The company provides portable, residential, commercial, and industrial generators that are in high demand if a weather event results in power outages.

Engineering Companies

Engineering companies often benefit from rebuilding efforts after major storms. These companies include AECOM (ACM) and Fluor (FLR). Both of them are major government contractors, which means they can potentially benefit from federal disaster relief.

Fluor also has a diverse business including engineering, procurement, construction, fabrication and modularization, commissioning and maintenance, and project management services, all of which may see additional revenue following major storms.

AECOM's business is equally diverse, as it provides services for projects including highways, bridges, government and commercial buildings, water facilities, and power transmission and distribution.

$1.2 trillion

The total amount of funding allocated by the Infrastructure Investment and Jobs Act, which was signed by President Joe Biden on Nov. 15, 2021. The bill commits more than $50 billion in funding toward climate change by providing protection against weather-related incidents like droughts and floods, as well as wildfires.

Battery Companies

Battery sales usually increase before storms are expected as consumers stock up on batteries to power their flashlights and radios.

When you think of household batteries, Panasonic and Duracell may come to mind. Berkshire Hathaway acquired battery company Duracell from Proctor & Gamble (PG) in 2016 by buying all remaining shares.

Water Solution Companies

Clean water shortages can occur after a major storm hits, especially when floodwater affects public drinking water. Companies that can test and treat water, as well as transport it, are needed and are often contracted by the government to help in these cases. One of the leaders in this area is Xylem (XYL), making it a company to watch during the storm season.

Article Sources
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  1. National Oceanic and Atmospheric Administration. "Tropical Cyclone Climatology."

  2. Generac. "About Us."

  3. The White House. "Updated Fact Sheet: Bipartisan Infrastructure Investment and Jobs Act."

  4. Business Wire. "P&G Completes Exchange of Duracell to Berkshire Hathaway."

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