Which Stocks Benefit From Natural Disasters?

Which stocks benefit from natural disasters? Companies such as Canadian Tire Corporation Limited (TSX:CTC.A) and Loblaw Companies Ltd. (TSX:L) sometimes benefit.

| More on:
The Motley Fool

This year has already been one for the record books when looking at natural disasters, and we still have almost four months to go. We’ve had heavy flooding and wildfires across multiple parts of Canada, and now the southern U.S. is expecting a second large hurricane to make landfall shortly. What do all of these emergencies mean for your stock portfolio, and are there any companies that benefit from natural disasters?

There are certainly companies hurt by all of these events, especially insurance companies that may have to make large-scale payouts. After Hurricane Harvey in the U.S., we’ve already seen energy companies such as Enbridge Inc. take a hit because they have been forced to halt operations in Texas.

Before the disaster

Even though we might feel squeamish about companies benefiting from disaster, the truth is, some companies do very well when disaster strikes.

Some problems, such as hurricanes and wildfires, can be anticipated by at least a few days, giving residents time to prepare. With this time, people sometimes move as many belongings as they can into storage units for protection. So, companies such as StorageVault Canada Inc. (TSXV:SVI) can come out ahead after a disaster. People will also try to stock up on supplies, such as food and water, so grocery chains like Loblaw Companies Ltd. (TSX:L) can see a temporary boost in sales.

During and after the disaster

When people are forced to flee their homes, many of them up wind up in hotels. Large hotel chains, such as Hilton Worldwide Holdings (NYSE:HLT) and Marriott International Inc. (NASDAQ:MAR), now the owner of the Canadian Delta chain of hotels, often see bookings go up right after a catastrophe, helping their bottom lines. In the case of some extended disasters, such as towns being destroyed by forest fires, governments and insurance companies sometimes end up paying for extended hotel stays for those displaced by the disaster.

Once the event is over, people need to repair, replace, or rebuild. Hardware-type companies, such as Home Depot Inc.(NYSE:HD), benefit from people handling DIY repairs. Large construction and contracting companies benefit when entire towns and large buildings need to be replaced or repaired. Even companies like Canadian Tire Corporation Limited (TSX:CTC.A) benefit. Disasters also tend to destroy items such as outdoor furniture and sporting equipment, so store cash registers ring when people begin to replace whatever they’ve lost.

Investor takeaway

Natural disasters have been increasing in recent decades, meaning you can’t afford to ignore them and the effect they might have on your life and your money. Smart investors look for diversity in their portfolios and ways to mitigate the effects of large global and economic impacts. Including stocks that might benefit from (or at least won’t be hurt) by natural disasters is one smart way to protect your money.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Susan Portelance has no position in any stocks mentioned. The Motley Fool owns shares of Enbridge. Enbridge is a recommendation of Stock Advisor Canada.

More on Energy Stocks

grow dividends
Energy Stocks

1 Small-Cap Energy Stock Could Raise Dividends 6 Times by 2023

The Omicron variant is a threat, but should not cause a significant erosion in oil demand say energy bulls. Rafi …

Read more »

green power renewable energy
Energy Stocks

Are These 2 Undervalued Green Energy Stocks the Best to Buy Now?

As most investors know, this market environment, with stocks selling off significantly, is the best time to buy high-quality companies …

Read more »

oil and gas pipeline
Energy Stocks

Why Obsidian Energy Stock Is up Over 17% This Week

What happened? While tech stocks have continued to teeter lately, energy names have been unstoppable. The small-cap names among them …

Read more »

Oil pumps against sunset
Energy Stocks

Oil Bull Market: 3 Top ETFs to Buy Today

Oil prices continued to gain momentum in early afternoon trading on January 26. The price of WTI crude was up …

Read more »

warning or alert
Energy Stocks

Alert: Bank of Canada Didn’t Raised Interest Rates!

The Bank of Canada has decided not to raise interest rates after today’s policy meeting. That means the Bank of …

Read more »

oil and gas pipeline
Energy Stocks

Enbridge: 7% Yield AND Dividend Growth in One Package!

Enbridge (TSX:ENB)(NYSE:ENB) is the rare dividend stock that “has it all.” A 7% yielder that also has a very high …

Read more »

money cash dividends
Energy Stocks

4 Top Dividend Stocks to Buy Under $30

With the U.S. Federal Reserve signalling to raise its policy interest rate from March, the volatility in the global equity …

Read more »

Group of industrial workers in a refinery - oil processing equipment and machinery
Energy Stocks

Enerflex (TSX:EFX) Dips 16%: Why I’m Buying This Energy Stock Today

Enerflex (TSX:EFX) is a Calgary-based company that supplies natural gas compression, oil and gas processing, refrigeration systems, and electric power …

Read more »