Stocks for Hurricane Season 2013

Stocks for Hurricane Season 2013

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WeatherBell Analytics recently published their forecast for the upcoming hurricane season and those living on the East Coast may not like it. Data shows that the correlation between a warm Atlantic Multidecadal Oscillation (AMO) and a cold Pacific Decadal Oscillation (PDO) points towards a more than active tropical storm presence along the east coast.

The last time this happened was during the 1950’s, during which the amount of tropical storms/hurricanes to hit the New York/New England area was at its peak over the previous century. However, the data provided signals that this will be a more dangerous season for the southeast and the Caribbean. Hurricane season in the Atlantic starts June 1 and ends November 30.

Unfortunately for home owners, the author writes, “There are no areas where I can say below normal activity is expected”.  So if you live on the east coast and you’re still skeptical about getting hurricane insurance for your property, it might be time to reconsider.  

And that means more revenue for insurance companies. If the hurricanes don’t happen (which looks unlikely), then insurance companies will have plenty of extra cash laying around which could lead to an increase in their value or returned to shareholders as a dividend increase.

Investing Ideas

Even when Sandy hit, the market did not behave irrationally upon reopening. In fact when analyzing the Turbo Chart below, we can see that three of the major insurance companies actually saw in increase in their stock price again about two weeks after the storm.

Since Sandy, home improvement stores Home Depot (HD) and Lowe’s (LOW) have seen their stock prices rise significantly.


 

Press “Play” on the Compar-O-Matic to see how one-year return for these insurance companies has changed over the last 2 years:

Descriptions and links:

1. American International Group, Inc. (AIG, Earnings, Analysts, Financials): The company operates property and casualty insurance networks worldwide and conducts activities in the U.S. life insurance and retirement services industry. Market cap at $57.02B, most recent closing price at $38.62.
 

2. The Allstate Corporation (ALL, Earnings, Analysts, Financials): Engages in the personal property and casualty insurance, life insurance, retirement, and investment products businesses primarily in the United States. Market cap at $23.55B, most recent closing price at $49.32.
 

3. Progressive Corp. (PGR, Earnings, Analysts, Financials): Provides personal and commercial automobile insurance, and other specialty property-casualty insurance products and related services primarily in the United States. Market cap at $15.3B, most recent closing price at $25.37.
 

4. Hartford Financial Services Group Inc. (HIG, Earnings, Analysts, Financials): Provides insurance and financial services in the United States and internationally. Market cap at $10.99B, most recent closing price at $25.17.
 

5. Safety Insurance Group Inc. (SAFT, Earnings, Analysts, Financials): Provides private passenger automobile insurance products primarily in Massachusetts and New Hampshire. Market cap at $744.12M, most recent closing price at $48.54.
 

6. Mercury General Corporation (MCY, Earnings, Analysts, Financials): Engages in writing private passenger and commercial automobile insurance in the United States. Market cap at $2.1B, most recent closing price at $38.25.
 

7. The Travelers Companies, Inc. (TRV, Earnings, Analysts, Financials): Provides various commercial and personal property and casualty insurance products and services to businesses, government units, associations, and individuals primarily in the United States. Market cap at $31.9B, most recent closing price at $84.41.
 

Home Improvement Stocks:

8. The Home Depot, Inc. (HD, Earnings, Analysts, Financials): Operates as a home improvement retailer. Market cap at $104.08B, most recent closing price at $70.06.


 

9. Lowe's Companies Inc. (LOW, Earnings, Analysts, Financials): Operates as a home improvement retailer in the United States, Canada, and Mexico. Market cap at $41.79B, most recent closing price at $38.39.
 

10. Lumber Liquidators Holdings, Inc. (LL, Earnings, Analysts, Financials): Operates as a specialty retailer of hardwood flooring in the United States. Market cap at $1.85B, most recent closing price at $68.05.
 

-Ryan Horch, Kapitall Wire

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