With Hurricane Florence bearing down on the east coast like a wrecking ball, it's very likely that the storm damage could rattle the market in the coming days. Here are a few stocks that I think could take a residual hit in the third quarter.
Retail will definitely suffer
With the storm looking more and more likely to "hang around" and pummel the east coast with rain, I predict that overall retail sales could experience a slowdown as forecasted east coast rain will make shoppers less likely to go out. We're not just talking about the consumers in areas where their local stores might be flooded. The rainy weather could damper results throughout North and South Carolina; as well as Virginia. Heck, my native Pennsylvania is predicted to get a ton of upcoming rain from the after-effects of the storm. My home state has already suffered flooding that certainly affected stores like JCPenney (JCP) , Sears (SHLD) , and Macy's (M) . In a retail environment that needs every boost it can get, this is not what the doctor ordered. I'd look to see some missed opportunities from these names to close out the third quarter. JCP and SHLD, in particular, need cash badly.
On the flip side, Home Depot (HD) and Lowe's (LOW) might be good plays, as many homeowners will be making purchases both before and after the storm for repairs. I do urge a little caution here, as the hurricane could also have a negative sales effect on many locations within the third quarter, dependent on how much flooding occurs.
Insurance companies might have to pony up
For as much money as insurance companies enjoy making, times like these are what they save it for. The devastation from this hurricane could wreck a multitude of homes and cars. Big time insurers like AllState (ALL) , Metlife (MET) , an indirect hit at Berskhire Hathway through subsidiary Geico ( (BRK.A) (BRK.B) ), all face the possibility of paying out a lot of money on policies in the coming weeks. That could very well damage the tail end of their third quarter. One strategy might be to watch for the fallout in Q3 results that might stem from diminished incomes and grab some shares of these big names while they're battered.
Car Sales will take a hit
Hurricanes like this will damper car sales within the Carolinas. If dealerships are damanged, the sales might be impeded for long after the storm passes. That holdup would come at a time when names like General Motors (GM) , Ford (F) , Fiat Chrysler (FCAU) , Toyota TM , and even Tesla (TM) , are trying to fight their way through a decline in overall car sales. Folks in the Carolina markets buy a lot of trucks. Trucks are the money gem that the big names rely on for profitability. If the damage is bad enough, I almost certainly expect Ford to particularly suffer in the third quarter. They've been ever more reliant on their truck/SUV sales in the United States as their U.S. sedan/foreign assets are all faltering. A holdup in a key truck market could hammer the third quarter. The same goes for the other names as well.
Roofing is the one thing that Florence seems almost assured to help
Hurricanes are nasty and the winds are insane. Plenty of big expensive coastal homes with intricate roofs are about to get crushed. To that end, I like Beacon Roofing Supply (BECN) as a play against the weather. As insurance companies dish out cash to cover home policies, roofing companies stand to make some big sales along the coast that they otherwise wouldn't have had before. With the exception of a few recent quarters, BECN has been driving net income in recent years, and the onslaught of weather (there's another hurricane heading for what could potentially be the gulf coast) that's aiming at our shores means there could be plenty of work coming up for the company. I'm not necessarily saying this is a stock I'd keep long term, but there's definitely near term upside coming its way if this storm stays as bad as it seems.
