These little-known stocks can see an uptick in demand when hurricanes strike


Before a hurricane like the recent Hurricane Idalia hits land, many consumers stock up on flashlights and batteries from Home Depot, Lowe’s and Generac. Behind the scenes there are a number of companies who benefit from the clean-up and reconstruction that occurs after natural disasters. The Atlantic hurricane season this year is above average, with 14 storms to date, four hurricanes, and three major hurricanes. As Hurricane Lee approached New England and Canada, it grew to a Category 1 storm. Climate change is causing extreme weather and increasing the number of billion dollar disasters. Some companies benefit more than others. In 2022 the U.S. suffered 18 weather-related and climate disasters, each costing at least $1 billion. Andrew Chanin has been running the Procure Disaster Recovery Strategy ETF, which was opened in June 20,22. He said that extreme hurricanes are becoming more frequent. Investors and individuals are left wondering if they have done enough to prepare for the possibility of more intense hurricane seasons. This exchange-traded funds, which has assets of just $2.2million, tracks companies who help mitigate natural disasters such as hurricanes and wildfires. It also helps recover from them. The fund is up 19% in this year, better than the S & P 500, which gained 16.2%. Companies in the portfolio are often impacted by extreme weather events. Some can be obscure. These disasters can be beneficial to stocks like Houston-based Sterling Infrastructure, and AtkinsRealis, formerly SNC-Lavalin Group – a Canadian engineering, construction and design company. Morningstar says that both stocks are Chanin’s largest holdings. Sterling Infrastructure shares are up 125% by 2023, and have been rising for five straight years. This brings its market value to $2.3billion. According to FactSet’s analysts, the few who cover Sterling Infrastructure give it an overweight rating with a $87 price goal, which implies another 18% growth over the next 12 months. Sterling beat analyst’s estimates in August when it announced its second-quarter results. It reported 13% revenue growth, 30% higher EBITDA, expansion in each of the business units (e-infrastructure solutions, transportation, and building solutions), and increased earnings. AtkinsRealis has also had a great year, with an 84% increase. Bloomberg reports that the recently rebranded firm — which projected last month organic revenue growth as high as 15% for this year — plans to begin acquisitions in the U.S. Northeast and Northwest next year. AtkinsRealis’ average analyst rating is overweight, and its price target suggests a 9% increase. Chanin stated that roughly one-third of all financial losses from natural disasters occur in the United States. If they could increase their footprint, that would allow them to access more contracts. Sulzer, a Swiss manufacturing and industrial engineering firm, is another ETF holding. According to FactSet, the fluid engineering and chemical-processing company has gained 30 percent this year. It has a rating of overweight, a price target that implies a 10% increase in value, and a median weighted rating. Chanin also mentioned Great Lakes Dredge & Dock, and Clean Harbors as other strong names in disaster recovery. Citigroup researchers cite Lowe’s, Tractor Supply & Home Depot as well as Floor & Decor Holdings.