Potential Winners & Losers from Hurricane Irene
With Hurricane Irene working its way up the U.S. east coast, we wanted to highlight what stocks may get battered as a result of the hurricane’s damage as well as highlight those stocks that stand to benefit. Brian Nichols has posted on Seeking Alpha an interesting summary of stocks specific to the Carolinas that may be impacted by Irene. Our focus is on stocks that may be more broadly impacted due to damage as well as consumer behavior across the U.S. east coast.
Potential Negative Impact
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- American International Group Stock Is Undervalued
- American International Group’s Stock Is Trading Below Its Intrinsic Value
- American International Group Stock To Post Mixed Results In Q4
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Insurers
Property insurers will likely take the biggest hit among insurance companies. Hopefully personal injury and life insurers will not be impacted by Irene. Leading property insurers include AIG (NYSE:AIG), Hartford (NYSE:HIG), Travelers (NYSE:TRV) and Berkshire Hathaway (NYSE:BRK.A). Here is a full list of property and casualty insurers according to Google Finance.
In the case of AIG, we estimate that about 40% of its value comes from property and casualty insurance premiums.
This figure is closer to about 25% for Hartford. In comparison, MetLife (NYSE:MET), for example, has very little property and casualty exposure.
Utilities
Electrical utility companies may see an uptick in their quarterly costs as a result of crews working overtime to restore power to certain regions. Potentially impacted electrical utilities include: Duke Energy (NYSE:DUK), Progress Energy (NYSE:PGN), Dominion Energy (NYSE:D), Constellation Energy (NYSE:CEG), NSTAR (NYSE:NST) and Con Ed (NYSE:ED).
Airlines & Air Freight
There have already been 1,000+ flight cancellations as of Friday afternoon. JetBlue (NASDAQ:JBLU), Southwest (NYSE:LUV) and American Airlines (NYSE:AMR) have already cancelled numerous flights. US Airways (NYSE:LCC) and Delta (NYSE:DAL) may be announcing cancellations as well while UPS (NYSE:UPS) and FedEx(NYSE:FDX) may announce delays in some shipments.
Potential Positive Impact
Supplies
We’re already witnessing high demand for bottled water, generators, fuel, charcoal, flashlights and batteries. Some of the beneficiaries of this demand are: Home Depot (NYSE:HD), Lowe’s (NYSE:LOW), CVS (NYSE:CVS), Walgreen (NYSE:WAG), Rite Aid (NYSE:RAD), Wal-Mart (NYSE:WMT), Costco (NASDAQ:COST), Whole Foods (NASDAQ:WFM), Safeway (NYSE:SWY), Kroger (NYSE:KR).
Credit Card Issuers
Many people will be financing their large supply purchases with credit cards. While the incremental transactions will benefit credit card processors like Visa and MasterCard, the real benefits are likely to accrue to the bank issuers of credit cards. Some of the largest credit card issuers are: Capital One (NYSE:COF), JPMorgan (NYSE:JPM), Bank of America (NYSE:BAC), American Express (NYSE:AXP).
Furthermore, banks may experience a negative impact from damaged buildings and ATM machines, although some of these costs will likely be defrayed by insurance.
Entertainment
If you’ve still got electricity, but don’t dare to venture outside, you’ll probably be catching up on some movies or missed episodes. Netflix may see a spurt of streaming activity as well as a few new sign-ups. The on-demand services of cable companies may also register a few additional film purchases.
Netflix (NASDAQ:NFLX), Time Warner Cable (NYSE:TWC), Comcast (NASDAQ:CMCSA), Cox Communications may all experience incremental on-demand usage. Satellite-based entertainment (Dish Network, DirecTV) may take an indirect hit if storm winds damage satellite dishes, reminding customers of the vulnerability of dish alignment at times like these.
What stocks are you watching as Hurricane Irene rolls in?