As hurricane Irma bears down on the Caribbean with Florida in its sights are there stocks you should be selling and are there stocks you should buy? The Washington Post writes that Korea and back to back major hurricanes have driven the market down. As stocks skid over worries what should you invest in after hurricanes Harvey and Irma?
Major stock indices closed down more than 1 percent Tuesday as traders worldwide reacted to a rapid escalation of the North Korean nuclear crisis, a second powerful hurricane barreling toward U.S. shores in as many weeks and a looming political fight over the increase in the national debt ceiling.
Financial stocks and insurance companies whose balance sheet could be bludgeoned by another hurricane were among the hardest hit. Conglomerate Berkshire Hathaway, which is heavily bent toward insurance revenues, was down nearly 2 percent. Goldman Sachs Group and JPMorgan were down 3 percent and 2 percent respectively. Bank of America was down more than 3 percent as well.
Many investors are investing in gold as a hedge against risk but US treasuries are also up as others flee the stock market. Regarding the hurricanes many stocks will do well because of rebuilding and reinvestment related to hurricane damage. Those in the path of the storms who suffer damage are exceptions. CNBC and Cramer’s Mad Money notes that as Texas rebuilds after Harvey certain stocks will do well.
Cramer expects potentially tens of billions of federal dollars to flood Texas as the waters recede, especially because it is such a largely Republican state.
The massive reclamation project in Houston will likely deliver a boost to an array of companies related to rebuilding, the “Mad Money” host said.
From companies dealing in homebuilding materials – think Weyerhaeuser, Louisiana-Pacific and USG – to road aggregates – Martin Marietta Materials’ wheelhouse – to roofing – the specialty of Owens Corning and Beacon Roofing – Cramer is anticipating a lift across the board.
While large construction and supply companies will benefit across the board so will the likes of Home Depot and Lowe’s for do it yourselfers who are fixing up lesser damage. Also Houston the flooding damaged as many as half a million cars and trucks. That will be a lot of sales for local dealers and for the auto industry.
How about oil stocks? After all it was Houston that got hit by Harvey. The Motley Fool speculates on what hurricane Harvey means for oil stocks.
As Harvey approached the Gulf Coast, companies were forced to take immediate preventative measures. These included shutting down refineries on the Texas Gulf Coast, where more than 25% of the nation’s refining capacity is located.
Overall, Harvey knocked out more than 10% of the country’s refining capacity.
Besides refineries, many offshore oil platforms in the Gulf of Mexico had to be evacuated to ensure worker safety or shut down due to pipeline issues. Anadarko, for example, had to evacuate four of its 10 Gulf platforms and shut down four more. As of Friday, the U.S. Bureau of Safety and Environmental Enforcement said workers had been removed from 86 of the 737 manned oil and gas platforms in the Gulf. Onshore operations were also affected: ConocoPhillips ceased all of its operations in the inland Eagle Ford Shale.
Many companies will lose revenue on a temporary basis but will recover. Refiners will see better profits during the temporary rise in the price of gasoline.