If the events of last year – the novel coronavirus, social unrest, political upheaval – have taught us anything, it’s that Murphy’s law does not care about accumulated struggles. If it wants to kick you in the teeth, it will do so, even if your teeth were already kicked out. About the only thing you can do from a financial perspective is to consider stocks to buy when natural disasters strike.
Frankly, this isn’t just about the deadly winter storm that has debilitated Texas. Rather, investors should attempt to have some portion of their portfolios dedicated to investments that either perform well because of natural disasters or mitigate downside risk. Indeed, 2020 was a benchmark warning for preparing all aspects of your life – including your money – for when Mother Nature gets ugly.
Of course, stocks to buy in such dire circumstances is many investors’ minds right now because of the unprecedented crisis in the Lone Star State. I understand that on occasion, some parts of Texas can get quite chilly. But scenes from reporters on the ground suggest more of a resemblance to Siberia than a member of America’s Sun Belt region. Thus, the important lesson of natural disasters – they can happen anytime, anywhere.
Another reason to consider stocks to buy that specifically address natural disasters is the lingering economic damage that can result from the most pernicious examples. According to the Dallas Morning News, the winter storm could become the state’s costliest weather event. Unfortunately, this may mean that economically accretive companies can take a hit.
As well, natural disasters may send a shock wave of doubt and fear for investors. You might as well increase this potential five-fold because of the fiscal strains resultant from the coronavirus pandemic. I think reasonable investors will question how the U.S. will get out of this mess. While our political leaders are figuring that out, here are some stocks to buy that are built to help during a crisis.
- Home Depot (NYSE:HD)
- 3M (NYSE:MMM)
- Generac (NYSE:GNRC)
- CVS Health (NYSE:CVS)
- Denny’s (NASDAQ:DENN)
- Copart (NASDAQ:CPRT)
- Energizer (NYSE:ENR)
- Smith & Wesson Brands (NASDAQ:SWBI)
- Worksport (OTCMKTS:WKSP)
Just a warning before we get into it. There’s no guarantee that because these investments are geared toward natural disasters that they’ll be immune from broader market pressure. Given that most folks are speculating like crazy in the market, use the same due diligence for these crisis-related stocks to buy as you would any other investment category.
Home Depot (HD)
I don’t think it’s healthy for people to express too many emotions regarding their investments. Certainly, feelings of adoration or outright love can be a sign that you’re not thinking rationally about your portfolio. Nevertheless, if I had to pick one company that deserved such praise, it’d be Home Depot.
Personally, I think it’s smart to have HD stock as part of your long-term portfolio. If you don’t own it directly as part of your stocks to buy, I’m sure some of your retirement funds have it as a core holding. Mainly, this is because Home Depot is a secular business. Good economy or not, stuff happens and you need to take care of it.
I don’t think I’m just speaking for myself when I state that I have gratitude for Home Depot staying open throughout this pandemic. It may be a small gesture, but HD stock basically provided some semblance of normalcy. Therefore, I couldn’t think of a better investment for when natural disasters strike.
During the early months of the pandemic, 3M got into a lot of political heat. As you know, former President Donald Trump took the industrial and applied sciences giant to task, demanding that it produce N95 respirator masks for the American people and not for the Chinese.
Of course, nuances exist that make this story much more complicated. Nevertheless, the optics were not good. I’m also sure such incidents caused anti-China sentiment to rise both in the U.S. and throughout the world. However, I believe some of this animosity – at least toward 3M – is fading. That’s one positive for MMM stock.
Another is that like Home Depot, 3M is a stalwart in the business of dealing with natural disasters. After all, those N95 masks aren’t just useful for illness prevention. They offer protection against myriad airborne irritants and contaminants. Plus, the company offers many other useful products, making MMM stock a wise choice for emergency preparedness.
I believe this is the first time I’ve mentioned Generac as part of a list of stocks to buy. With the natural disasters that we’ve seen not just in Texas but throughout the troubled year of 2020, we may be talking about GNRC stock for a while.
That’s because of the company’s core energy management solutions, particularly as they related to home-based needs. From portable generators to large backup power systems, Generac’s suddenly super-relevant pipeline has been the toast of Wall Street. Since Feb. 10, GNRC stock is up nearly 31%.
Of course, much of that demand stems from the winter storm that has afflicted Texas. However, GNRC stock has also been gaining on the rolling blackouts in California last year. Namely, Americans are feeling very small right now, with the clear understanding that natural disasters can bewilder state governments of the greatest nation on earth.
This is going to be a talking point for years to come and GNRC stands to benefit from it.
CVS Health (CVS)
I’m a little bit surprised that CVS Health hasn’t responded that well to the Texas winter storm given that it’s an essential business. During the pandemic and following last year’s March doldrums, CVS stock enjoyed a solid performance. At that time, the SARS-CoV-2 virus was a big mystery. Therefore, very limited treatment options existed.
If you got sick, you were pretty much on your own – unless you wanted to risk being inside overcrowded healthcare facilities serving the direst cases. For millions of Americans, that wasn’t in the cards. And the smart ones stocked up on over-the-counter flu and cold medication, just in case. That had a hand in lifting CVS stock earlier last year.
However, with the Covid-19 vaccine rollout, CVS Health’s narrative took a hit. Nevertheless, I don’t think the winter storm is the last of our natural disasters. I got a bad feeling something else is lurking, which is why you may want to consider CVS as part of your long-term stocks to buy.
Under ordinary circumstances, electing Denny’s as part of a portfolio of stocks to buy may seem like a what-the-heck moment. Have I lost my mind? Many folks have pent-up demand for eating at restaurants. They do not have that same sentiment for Denny’s and by logical extension, DENN stock.
However, we’re not talking about stocks to buy for hosting a wedding reception but rather, investments that are relevant to natural disasters. For that, I believe DENN stock is underappreciated. It’s one of the few places today that offer locations that are open 24/7. You might not think that’s so important. But I bet you that there are some essential workers working the overnight shift that will disagree.
As you know, extended natural disasters have a tendency of displacing people. When you’re struggling and stressed, you don’t care about calories – only that you consume them. While I don’t think DENN will make you rich, it’s an under-the-radar name that you may want to consider.
You might be thinking what an auction site for salvaged vehicles has to do with natural disasters. I mean, natural disasters are what causes cars to be salvaged in the first place. Thus, Copart shares are at risk for falling, not as part of a viable collection of stocks to buy.
Granted, anything can happen so I’m not guaranteeing anything. However, CPRT stock is relevant in that some calamities result in property damage, especially to personal vehicles. Therefore, demand for salvaged vehicles may increase not necessarily because of increased supply but for securing critical parts for cheap.
Also, this is a cynical argument, but we could see CPRT stock rise based on this brutal economic slowdown. During and following the Great Recession, new car sales declined significantly. This might lead some folks to consider buying salvaged title vehicles just to get around.
Yeah, it’s not a heartwarming topic, that’s for sure. Still, you can’t help but feel that the circumstance above will be net bullish for Copart.
Energizer is another one of those names that hasn’t responded that well to the Texas storm. Again, I’m surprised but this circumstance shouldn’t last too long. Therefore, I’m including ENR stock in my list of stocks to buy for natural disasters.
Of course, the crisis that has afflicted the Lone Star State is a reminder that you need an emergency kit for whatever lies ahead – and yes, that includes batteries. When the power is out, you need some external source to get information, such as through a good old-fashioned radio.
Also, the New York Times detailed a story which discussed Texans who were fortunate enough to have power in their homes – only to be hit later with exorbitant utility bills. One person the Times featured had a bill of nearly $17,000, wiping out his savings. So, even when you do have power, you shouldn’t always use it.
Finally, the storm has taught every American – whether you live in Texas or not – to always be prepared for anything. It’s better to have batteries and not need them than to need them and not have them. That’s the basic viable thesis for ENR stock.
Smith & Wesson Brands (SWBI)
You find out a person’s true character when they are put under pressure. The Covid-19 disaster demonstrated that most Americans are good, salt-of-the-earth people. However, many are not. And firearms, like them or not, have a tendency of keeping everyone polite. Therefore, I like Smith & Wesson Brands, but I especially like SWBI stock for natural disasters.
Again, most Americans are good people so please don’t email me about you being a good person. I get it. But it would be intellectually dishonest to state that some folks use natural disasters to advantage their fellow person in their hour of need. I heard some horror stories regarding Hurricane Katrina about good men having to band together to protect women who were at risk of assault.
Sure, guns complicate matters. However, they’re often the last line of defense. And that’s really the case with natural disasters when law enforcement resources are stretched. Cynically, then, SWBI stock is a solid buy.
I don’t want to end this list of stocks to buy on a downer so I’m going to perk it up with a potentially outsized opportunity. Specializing in solar power, Worksport features multiple clean energy solutions. Mainly, the company is known for its solar panel tonneaus for pickup trucks. Now, drivers can enjoy green energy while protecting their cargo from theft and the elements.
With Worksport’s Terravis system, the solar tonneaus charge a scalable battery storage system that can integrated into the cargo area of any pickup truck. Such a feature is useful for addressing natural disasters as these battery systems provide usable, portable power where it’s needed.
Beyond that, WKSP stock has qualities that are useful for an eventual return to normal. For instance, with the solar panels, both electric vehicle drivers (through integrated OEM systems) and combustion-based fleet owners can benefit from clean energy technologies.
Because shares are priced below a dollar, though, WKSP stock is a high-risk, high-reward opportunity. Still, if you can stomach potential volatility, this is one to consider.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.