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Trading Hurricane Florence: Investors Make Storm Stock Picks

Shanthi Rexaline

The Atlantic hurricane season is peaking and the imminent storm threat is from Hurricane Florence, which is fast approaching the Carolinas. The National Hurricane Center has designated it as a Category 4 hurricane and expects the storm to strengthen over the next day or so before weakening slightly on Thursday, when it is expected to make landfall.

Hurricane Florence is on track to inflict damages to the tune of $27 billion, which would make it the ninth most-expensive storm in the U.S, Bloomberg reported.

Even as the hurricane threat looms, investors are attempting to capitalize on this potentially catastrophic event by lightening their holdings of insurance stocks while building positions on stocks related to rebuilding and travel — especially those with exposure to the east coast.

Insurers On Watch List

Allstate Corp (NYSE: ALL), Travelers Companies Inc (NYSE: TRV) and Progressive Corp (NYSE: PGR) are heavily exposed to states such as Georgia, South Carolina, North Carolina and Virginia that could be potentially impacted by Hurricane Florence, Buckingham Research's Amit Kumar said in a Monday note.

Allstate and Travelers have a market share of 7.4 percent and 4.5 percent, respectively.

That said, the impacted states account for just a 4.3-percent share of the overall nationwide premium, the analyst said. 

Among commercial property insurers, Travelers, Hartford Financial Services Group Inc (NYSE: HIG) and Allstate are the most exposed and could be the worst-hit, Kumar said.

See also: Goldman Downgrades Evertec, Says Puerto Rico's Hurricane Recovery Will Hurt Prospects

Generac To Get Hurricane-boost

Shares of power generation equipment manufacturer Generac Holdings Inc. (NYSE: GNRC) advanced solidly Monday amid expectations that Hurricane Florence will brighten the company's outlook.

Storm-related purchases would drive continued healthy shipments of portables, Canaccord Genuity analyst Chip Moore said in a Monday note.

The analyst said any major outage is likely to lead to another boost to Generac's full-year outlook.

"A major outage event would likely also help drive growth in the C&I market, including potential for increased activity with major telecom accounts (while supporting push for broader backup power mandates in critical care applications — similar to recent Florida legislation)," Moore said. 

Benefiting From The Calamity

Other sectors that could benefit from the hurricane's potential impact are construction and related supply companies, home improvement retailers and car rental agencies. 

Louisiana-Pacific Corporation (NYSE: LPX) and Fluor Corporation (NEW) (NYSE: FLR) are among construction companies active in the region likely to be hit hard by the hurricane, according to Forbes.

Shares of home improvement retailers Lowe's Companies, Inc. (NYSE: LOW) and Home Depot Inc (NYSE: HD) are on fire in the wake of hurricane, with both hitting all-time highs.

Car rental companies such as Avis Budget Group Inc. (NASDAQ: CAR) and Hertz Global Holdings Inc (NYSE: HTZ) also stand to gain as Carolinas residents in Florence's path evacuate to safety. 

Related Link: How The Path Of Hurricane Florence Could Affect You At The Pump

Hurricane Florence seen from the International Space Station on Sept. 10. Photo courtesy of NASA. 

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