In the wake of the devastation left by Hurricane Dorian, several Caribbean islands and Southern U.S. states will have to begin a rebuilding process, at huge cost. Infrastructure, housing, and transport will all need to be rebuilt, but where do the resources for this come from?
These three businesses play an active role in disaster preparation and relief, and often see a spike in profits during hurricane season and when natural disasters strike.
1. Home Depot
A significant chunk of sales for Home Depot (NYSE:HD) comes in the buildup to a hurricane or other major storm, the public reacts to reports of a possible impending devastation.
It is natural that when people hear of an impending disaster, they will stock up on whatever supplies they need to protect and, if necessary, repair their homes, especially before all of these supplies run out. Home Depot even runs emergency command centers dedicated to natural disaster responses, most recently in the aftermath of Hurricane Dorian.
With 150 stores in the path of Dorian, Home Depot enlisted 200 staff at its command center, dedicated to keeping customers in these affected areas happy by maintaining supply chains, operations, human resources, and merchandise.
As one of the largest home improvement retailers in the world, Home Depot has managed to build and maintain a strong following in the event of disasters, as it has heavily contributed to relief efforts via collaborations with organizations such as the American Red Cross. In the lead-up to storm season, Home Depot may just be worth the investment.
Another company that thrives on the psychological impact of natural disasters is U.S.-based Walmart (NYSE:WMT). The company behind the wealthiest family in the world also experiences spikes in its sales, as well as stock, in the buildup to a disaster, and sometimes in its wake.
Walmart often sees a spike in sales, even when a weather event does not have a significant impact on the locale. The massive retailer has a reputation for selling just about anything and everything, so when a storm is forecast, people pre-emptively purchase products such as batteries, shovels, food, and generators, just to avoid and potential shortages.
The company has also reportedly been compiling predictive data since 2004 in order to best target customers with "disaster season" products. "Strawberry Pop-Tarts increase in sales, like seven times their normal sales rate, ahead of a hurricane. And the pre-hurricane top-selling item was beer," Linda M. Dillman, former chief information officer for Walmart, told The New York Times.
However, Walmart is not without a philanthropic side. Back in 2017, a Walmart spokesperson reported that the company was rethinking disaster relief based on the data it had at its disposal to always have essentials such as ready-to-eat meals and building supplies on hand. Following Hurricane Dorian, Walmart also pledged $500,000 in cash and donations for relief and recovery.
3. Generac Holdings
A final company that accommodates a very niche need during disaster season is Generac Holdings (NYSE:GNRC), which manufactures and sells power generators.
In 2017, the United States and Caribbean were battered with successive hurricanes that caused severe damage and power outages. These storms seemed to jolt people into the realization that they could not rely on local power suppliers, and so Generac enjoyed one of its most successful quarters. Sales jumped more than 22% to $457.3 million, which was a new record and was far greater than the $420 million that most of those following the stock were looking to see.
Fast forward to 2018 and sales leading up to the storm season have increased again as people want to be more prepared than they were the year before. It is not just individuals, but businesses also provide significant income for Generac, as they purchase its large-wattage generators to power stores or supermarkets during adverse weather conditions.
During Hurricane Florence that year, Generac deployed advanced storm teams who had the tools and skills to repair and install generators in the midst of the disasters, helping enhance public image and build trust in Generac's product. In such weather-battered parts of the world as the Caribbean and Southeast United States, generators have quickly become an everyday item.
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