Hurricane-Proof Your Portfolio With These ETFs

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September 11, 2018 6:35am NYSE:XLY

From Zacks: The first major storm of this year – Hurricane Florence – started brewing in the Atlantic. The threat has been accredited the Category 4 status (notably category 5 indicates the strongest), meaning winds are likely to blow at speed as fast as 130 mph and can ravage property and lives.

Though the hurricane is expected to weaken in the coming days, recent computer-simulated predictions show there’s a possibility that Florence could hit southeastern coasts by late this week. Apart from this, storm Gordon hit the Gulf Coast region on Sep 5, after it lashed on the west of the Alabama-Mississippi border.

Whatever the case, investors can keep track of the below-mentioned sector ETFs and stocks before every Atlantic Hurricane season, which spans from June to November.

Likely Gainers from Hurricanes

Home Retailers

The condition of houses in an area ravaged by a massive storm can well be imagined. So, home improvement retailers like Home Depot Inc. (HD – Free Report) and Lowe’s Companies Inc. (LOW – Free Report) may benefit this season depending on the strength of the storm. ETFs like Consumer Discretionary Select Sector SPDR Fund (XLY – Free Report) should also benefit (read: Home Retailer ETFs Set to Gain After Harvey).


This should shower gains on infrastructure stocks as re-building will push up their demand. So, companies dealing in building materials should see a surge. The Materials Select Sector SPDR Fund (XLB – Free Report) , SPDR S&P Homebuilders ETF (XHB – Free Report) and Invesco Dynamic Building & Construction (PKB – Free Report) have high chances of outperforming.

Likely Losers from Hurricanes


If destruction is massive, insured losses could be as high. Property and casualty insurance companies may thus be hit hard as these are likely to shell out handsomely on claims in such catastrophic storms. Insurance stocks normally decline after such events. Shares of property and casualty homeowners’ insurance companies like Universal Insurance Holdings Inc. and Heritage Insurance Holdings Inc. HRTG.

iShares U.S. Insurance ETF (IAK – Free Report) should also be tracked closely this season. Having said all, investors should note that the sector performs well in rising rate environment, which currently is the case in the United States.


Severe hurricanes could roil rail and container activity, and crush infrastructure for transportation. So, airline companies like American Airlines (AAL – Free Report) , JetBlue (JBLU – Free Report)and Southwest (LUV) and US Global Jets ETF (JETS – Free Report) could feel the pinch. Transportation ETFs like SPDR S&P Transportation ETF (XTN – Free Report)also deserve attention (read: Airlines ETF Gains in 1-Month Period Despite Mixed Results).


Restaurants may see considerable sales reduction and destruction due to hurricanes. Per an article published on MarketWatch, Morgan Stanley’s analysisshows that some restaurants have considerable exposure to hurricane prone areas. These are the likes of Fiesta Restaurant Group Inc. FRGIDunkin’ Brands Group Inc. DNKN, Bloomin’ Brands BLMN and BJ’s Restaurants BJRI.

The Consumer Discretionary SPDR ETF (XLY) was unchanged in premarket trading Tuesday. Year-to-date, XLY has gained 17.90%, versus a 8.39% rise in the benchmark S&P 500 index during the same period.

XLY currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #1 of 41 ETFs in the Consumer-Focused ETFs category.

This article is brought to you courtesy of Zacks Research.

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