The Atlantic hurricane season hits the east and southern coast of the United States hard. Many homes and businesses see damage that could take years to repair. The damage is devastating but the recovery efforts create an opportunity for companies that provide supplies, tools and insurance.
That means that when hurricane season starts in June, you want to have your hands on these stocks and watch profits roll in from this jump in demand. 2024 is predicted to be one of the worst hurricane seasons to date and these three companies are sure to be at the forefront of supplying recovery efforts.
We’ll detail these companies’ unique positions to benefit from hurricane season and how their recent performances make now an excellent time to buy.
Home Depot (HD)
Home Depot (NYSE:HD) has been a leader in the home improvement industry for many years. Its firm position and extensive market share have made it a top pick for dividend and blue-chip investors. Home Depot not only has a consistent performance over time but has displayed a high performance during hurricane season from previous years.
Home Depot provides supplies and tools for repairs that many who suffer damage during hurricane season need. However, this profitability is not the only reason to buy the stock. Even outside of hurricane season, Home Depot is a top performer.
Although the stock’s growth has slowed somewhat this year, its consistency and resiliency throughout its history are undisputable. Home Depot has consistently increased its dividend payout for almost 40 years.
According to Home Depot’s first-quarter earnings report, sales are slightly down from last year. This dip is mainly due to a delay in Spring seasonals and macroeconomic conditions reducing consumer spending. However, 2024 guidance expects a sales recovery and the company still expects to maintain healthy gross margins of 33.9%.
The stock will certainly prosper during hurricane season and is an excellent stock to buy anyway, so investors should take advantage of the slight dip in price and buy today.
Berkshire Hathway (BRK-A,BRK-B)
Berkshire Hathway (NYSE:BRK-A, NYSE:BRK-B) is a multinational conglomerate that owns some of the world’s most extensive utilities and insurance companies, such as Geico. The stock trades in two classes of shares, each representing a larger or smaller percentage of equity in the company.
Geico is among the many insurance companies that will see high profits during hurricane season as a National Flood Insurance Program member. In addition, Berkshire is currently on a slight dip and presents a golden opportunity for investors to buy shares of this long-term-oriented collection.
Berkshire is likely to continue dipping from its 52-week high, and you can plan on buying at just the right time before the season sends the price soaring. As of the end of Q1 2024, the company had nearly $29 billion in cash and almost $32 billion in unearned insurance premiums.
Berkshire will undoubtedly continue to generate long-term profits for investors, and the current downward momentum presents a rare opportunity, especially given the expected momentum from hurricane season.
Caterpillar (CAT)
Caterpillar (NYSE:CAT) is the industry leader in construction equipment and machinery and has been an excellent stock for several years. In its most recent earnings report, the company reported a flat growth rate between Q1 2023 and now due to lower sales volume. As a result, the stock has slightly dipped, dropping almost 10%.
However, investors should see this as a golden opportunity for a company like Caterpillar. Although the company faced slower sales, it still implemented a price increase to maintain a healthy profit margin of 22.2% this quarter, the highest quarterly amount in 10 years.
Next, we factor in the likely boost in sales that Caterpillar will see during hurricane season. While Caterpillar is primarily known for its dominant hold in construction machinery, it is also a primary seller of generators.
Generators have proven to be among the most in-demand goods in previous hurricane seasons, and this year should be no different. In the short term, Caterpillar will profit from this demand. In addition, it has a backlog of infrastructure projects around the globe that will generate consistent income for the company for years.
Investors should buy now while they have the chance to get Caterpillar shares on the dip.
On the date of publication, Joel Lim did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
