Generators To Insurers: Trading Tropical Storms

Predicting the market impact of a storm like Tropical Storm Harvey can be as difficult as predicting the trajectory and wind speeds of the storm itself. However, there are plenty of investors looking to trade the storm, which meteorologists expect will strengthen to hurricane status before making landfall in Louisiana and Texas sometime over the weekend or early next week. Wind damage and flooding could have billions of dollars of economic impact.

Here’s a look as several kinds of stocks that could be moving this week thanks to the storm.

Insurers

Property and casualty insurers — including Allstate Corp (NYSE: ALL), Travelers Companies Inc (NYSE: TRV), Chubb Ltd (NYSE: CB) and Progressive Group (NYSE: PGR) — could be on the hook for covering storm damages. A series of late-summer 2016 storms increased Progressive’s year-over-year catastrophic losses by hundreds of percent from July to September.

Agriculture

Flooding in Louisiana last year severely impacted rice crops, and hurricanes impacting cotton, corn and pecan crops could be bad news for Archer Daniels Midland Company (NYSE: ADM) and Seaboard Corp (NYSE: SEB).

Oil Refiners

The Houston area is home to roughly a third of the entire U.S. oil refining capacity. Anadarko Petroleum Corporation (NYSE: APC) and Magellan Midstream Partners, L.P. (NYSE: MMP) have already shut down refineries in the area. Marathon Petroleum Corp (NYSE: MPC), Phillips 66 (NYSE: PXS) and Exxon Mobile Corporation (NYSE: XOM) all operate major refineries in the Houston area. If these refiners lose productivity due to shutdowns and/or storm damage, it could impact the stocks’ bottom lines.

Related Link: Trading A Weakened El Nino

Home Improvement Stocks

Home improvement stocks such as Home Depot Inc (NYSE: HD), Lowe’s Companies, Inc. (NYSE: LOW) and Beacon Roofing Supply, Inc. (NASDAQ: BECN) could see a major bump to business in the aftermath of a particularly devastating storm. If there are widespread power outages in the area, generator stock Genrac Holdings Inc. (NYSE: GNRC) could also pick up some storm-based business.

Construction Stocks

South Texas is one of the largest industrial hubs in the country, and storm damage to oil & gas plants, as well as any other businesses and infrastructure in the area will require a bit more than simple home improvements. Granite Construction Inc. (NYSE: GVA) and Fluor Corporation (NEW) (NYSE: FLR) are two companies that could benefit from infrastructure rebuilding efforts in the wake of the storm.