When Disaster Strikes, So Do Under-the-Radar Opportunities

by Andrew Zatlin August 29, 2023 2:00 pm ET

Natural disasters can be catastrophic. Often, people lose homes, pets, and even loved ones.

The thing is, these events can have a significant impact on the financial markets.

Let me explain what I mean and show you how disasters can also create opportunities.

For a transcript of this video, see below. This transcript has been lightly edited for length and clarity.

When Disaster Strikes, So Do Under-the-Radar Opportunities

Mother Nature has been wreaking havoc lately. Recently, we've experienced:

Wildfires in Hawaii.
Severe storms throughout the Midwest.
Even a hurricane in California.

I want to be clear: Natural disasters like these are no joke. They impact ordinary people and businesses. And above all else, we hope that if you're faced with this type of event that you stay safe.

However, as a financial analyst, I can't ignore the fact that when disaster strikes, so does opportunity...

The Ripple Effect

To understand what I mean, consider a few of the ripple effects when a weather-related event hits. For example:

Gas Prices Jump – Hurricanes are common in the Gulf of Mexico, where nearly 10% of U.S. natural gas is produced. When a storm appears, oil and natural gas pumping there stops, and prices at the pump go up. That's good news for energy companies. When Hurricane Ian struck last September, Cheniere Energy (LNG), a major natural gas producer, saw its stock climb almost 12%.

Insurance Companies Suffer – As you might expect, insurance companies don't like when disasters happen. It often means they have to pay out a lot of claims. When Hurricane Ian hit, insurance company Allstate (ALL) saw its stock fall for the next 20 weeks.

Leisure Takes a Hit – During times of disaster, leisure activities are usually put on hold. That's especially true for water-focused activities. Consider a cruise line like Carnival (CCL). Right before Hurricane Ian, this company's stock was trading at $29 a share. But after the storm, share prices fell to $17 – a 40% drop.

Homes and Buildings are Damaged – This one is probably the most obvious. Whether it's a hurricane, fire, tornado, or almost any other disaster, homes and offices are often hit hard. And when occupants need to rebuild, they head straight for hardware retailers like Lowe's (LOW) and Home Depot (HD).

Hurricane Season is Here

I'm bringing this topic to your attention today for an important reason. Hurricane season is upon us. And according to weather experts, it could be a rough few months.

Back in May, the National Weather Service reported a 30% chance of an above-average hurricane season – that would constitute as many as 11 or 12 hurricanes (in a typical year, we see about seven) and perhaps three major hurricanes, those with winds at least 110 miles per hour. But two weeks ago, the Weather Service upped the chances to 60%.

I've mentioned Hurricane Ian a few times, which was a devastating storm. It caused $112 billion in damages and wrecked more than 30,000 homes.

We could soon see storms cause similar damage. But as I mentioned, this does create opportunities for us as investors...

Double Your Money in Two Years?

During hurricane season, you could rush out and invest in oil and gas companies or even hardware retailers like Lowe's (LOW) or Home Depot (HD).

But keep in mind that most of these are massive companies. A few extra billion dollars in revenue as people rebuild homes or fill up their gas tanks isn't likely to move the needle too much.

What we want to focus on are smaller businesses that are more significantly impacted by a surge in storm-related revenue – ones that could see stock prices soar if just a little extra capital heads their way.

I've got such a company in mind, one whose stock could double in just the next two years. But the details are only for my Pro readers.

In the meantime, stay safe out there. We're in it to win it. Zatlin out.