Natural disasters are completely unpredictable (unless you got the memo that New Kids on the Block is back together) and seem to be on the rise over the past decade (although their occurrence is purely arbitrary).
That doesn't mean, however, that your portfolio needs to be unprepared when natural disasters strike. It's not a matter of whether one will occur; it's simply a matter of when and where. Therefore, today I propose to take a look at five companies that are profitable now but stand to see a significant uptick in business if a natural disaster were to arise. Again, I'm not wishing for a natural disaster, I'm merely pointing out stocks that could provide a hedge against Mother Nature's wrath.
Home Depot (NYSE: HD )
Home Depot is the no-brainer gimme of this group because its warehouses provide all of the tools necessary to rebuild your home after a storm or earthquake. But don't think that Home Depot only relies on post-disaster sales to drive growth. Hurricane season tends to be an important growth driver for the company's southeastern U.S. locations as homeowners spend untold fortunes boarding up and otherwise prepping their homes against wind-related damage.
Matrix Service (Nasdaq: MTRX )
During the lull between natural disasters, Matrix Service provides construction and routine maintenance services to the industrial, oil and gas, and electrical infrastructure sector. When a natural disaster strikes, the company's business really ramps up. Case in point: Following Hurricane Katrina in the Gulf of Mexico, Matrix's revenue exploded higher as it was called on to repair countless offshore oil rigs. On the mainland, Matrix provides maintenance of above-ground storage tanks for the petroleum industry and retrofits and renovation for the electrical generation sector -- all things that could come in handy if a hurricane or earthquake were to strike.
Kaydon (NYSE: KDN )
Kaydon provides a wide array of custom-engineered, performance-critical products worldwide to sectors ranging from defense to medical. None of these products is more important when a natural disaster strikes than its shock dampers used by the construction industry in everything from buildings to bridges to prevent them from collapsing during an earthquake. With few competitors -- Taylor Devices and ITT -- and multiple worldwide earthquake hot spots, the demand for Kaydon's products should remain strong.
Generac Holdings (NYSE: GNRC )
You know what would come in extremely handy if a natural disaster struck? If you answered "a generator to power your home," give yourself a pat on the back. The best part is that Generac not only provides the potential for power to residential homes, but it also makes larger wattage generators that businesses, including supermarkets, use to power their stores during emergency situations. With generators becoming more of an everyday item, as is evidenced by Generac's blowout earnings report two weeks ago, you don't have to wait to buy the stock.
Clean Harbors (NYSE: CLH )
Finally, with everyone focused on preparing for, and rebuilding after, the natural disaster, the idea of a natural disaster clean-up team almost becomes an afterthought -- but it shouldn't! Clean Harbors provides environmental clean-up services and was an instrumental name in cleaning up the Gulf of Mexico after the BP disaster in 2010. In short, if something bad happens to our ecosystem due to the oil and gas industry, there's a good chance Clean Harbors will be there to clean it up.
Today, we took a look at five companies that could help your portfolio prepare against life's inevitable disasters. While I wouldn't say that's a ringing endorsement for every company on this list, it does present an open opportunity for you to research these companies further and see if any of them meet your investment criteria.
Did I leave a disaster preparedness gold mine off this list? If so, tell me and your fellow Fools about it in the comments section below, and consider adding these stocks to your free and personalized watchlist.
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- Add Home Depot to My Watchlist.
- Add Matrix Services to My Watchlist.
- Add Kaydon to My Watchlist.
- Add Generac Holdings to My Watchlist.
- Add Clean Harbors to My Watchlist.