Hurricane Reaction of National Guard Indicates Stocks to Purchase 

Paul Dykewicz

Hurricane reaction of National Guard members indicates stocks to purchase that might benefit from increased demand due to damage inflicted by 2020’s severe storms.

The swift hurricane reaction of National Guard troops and airmen signal stocks to purchase for investors who not only may like the companies under normal conditions but especially when high winds, pelting rain and frightening floods pound affected regions. Governors do not activate the National Guard unless an emergency strikes, so savvy investors who like an early warning of what to sell and buy only need to pay attention and respond accordingly.   

Hurricanes, defined as tropical cyclones whose sustained winds reached 74 mph or higher, have been 50% more prevalent so far in 2020 than in typical years, with nine this year compared to the normal six, according to the Insurance Information Institute. The 2020 storm season thus far has produced 26 weather events severe enough to receive a name and nine of them — Hanna, Isaias, Laura, Marco, Nana, Paulette, Sally, Teddy and Delta — became full-fledged hurricanes.

Hurricane Reaction of National Guard Came Amid Winds of Up to 129 mph

Among the nine hurricanes, Laura, Teddy and Delta became major — category 3 or stronger — storms. Category 3 hurricane winds range from 111 to 129 mph and pose a high risk of injury or death to people, livestock and pets from flying and falling debris.   

Louisiana took the brunt of the blows inflicted by Hurricanes Laura and Delta that crashed upon its coastline within six weeks of each other. Hurricane Laura developed into a monstrous category 4 storm with winds of up to 150 mph — stronger than Hurricane Katrina in 2005 — and made landfall on Aug. 27 near Cameron, Louisiana, close to the Texas-Louisiana border. 

Its catastrophic storm surge, extreme wind and flash flooding caused CoreLogic to estimate that more than 430,000 homes in Texas and Louisiana, with a reconstruction cost value of $88.6 billion, were at risk of damage. Hurricane Laura became the seventh named storm to make landfall in the continental United States in 2020, breaking the record of six in 1886 and 1916.

Hurricane Reaction of National Guard Came Amid $14.1 Billion-Plus in Damage

The 150-mph top wind speed of Hurricane Laura tied with the Last Island hurricane of 1856 as the strongest ever to strike Louisiana. Hurricane Laura caused more than $14.1 billion in damage and 77 deaths, with insured loss estimates by catastrophe modelers ranging from $4 billion to $12 billion, according to the Insurance Information Institute. 

National Guard members who hunkered down in the armory in Lake Charles, Louisiana, witnessed firsthand the devastating power of Hurricane Laura when its winds caused a wall and two stories of brick in the drill hall to collapse, along with a portion of the roof. News organizations had warned that the storm surge would not be “survivable” but the National Guard members were saved from harm when a battalion commander, Major Nicholas Acosta, ordered soldiers to move out of the drill hall into safer parts of the armory, recalled Staff Sgt. Josiah Pugh, a public affairs officer who embedded with the soldiers there to cover the storm.

Photo of hurricane-damaged armory in Lake Charles, Louisiana, by Staff Sgt. Josiah Pugh

“I could hear the wind repeatedly slamming the armory and shaking, along with loud snapping sounds outside,” Pugh recounted. “I looked through the window peering into the drill hall and in the darkness saw the fresh rubble and trees thrashing.”

Hurricane Reaction of National Guard Overcomes Heavy Damage to Armory

Major Noel Collins, the chief public affairs officer for the Louisiana National Guard, said the soldiers emerged from the damaged armory after the hurricane passed Lake Charles and immediately began assessing damage and clearing roads blocked by fallen trees and branches. National Guard members also conducted security operations, installed generators in the affected areas and manned points of distribution (PODs) to hand out “Meals Ready-to-Eat” (MREs), water and ice to citizens in the area, he added.

Source: Louisiana National Guard

Hurricane Delta followed on Oct. 9, with winds approaching 100 mph, and struck Louisiana just 12 miles east of where Hurricane Laura hit. The final costs of the National Guard responses have yet to be determined but the federal and state governments will share the costs, “based on monetary thresholds,” Major Collins said.

Delta was 2020’s 10th named storm, fifth hurricane to strike the continental United States and the first Greek-letter hurricane to make U.S. landfall, according to the Insurance Information Institute. It brought hurricane conditions to southwest and central Louisiana and eastern Texas, then moved northeast through Arkansas, Mississippi, Alabama and the Tennessee Valley as a tropical storm before dousing the mid-Atlantic states with rain. Preliminary insured property losses range between $1 billion and $4.0 billion, according to catastrophe modelers.

“The simultaneous and enduring stateside responses to COVID and the two hurricanes are unprecedented in recent years,” Major Collins continued.

Louisiana’s Guardsmen activated in support of its COVID-19 response are part of the longest enduring stateside mission since Hurricane Katrina, Major Collins said. The Louisiana National Guard routinely supports state and federal missions and is preparing to deploy more than 2,000 soldiers overseas in the coming months, he added.

Hurricane Reaction of National Guard Affects Mississippi

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National Guard troops are trained to protect life, preserve property and ensure people’s safety and security during times of natural disasters, said Lt. Col. Deidre D. Smith, director of public affairs for the Mississippi National Guard. Relief and response missions to such catastrophes are “distinctly and uniquely” the kind of service that the National Guard is trained to provide, she added.

The National Guard in Mississippi faced the effects of Hurricane Sally after it pummeled portions of Pensacola with 24 inches of rain and sustained winds of 105 mph before its landfall as a Category 2 strength hurricane on Sept. 16 near Gulf Shores, Alabama, bringing the extremely dangerous, life-threatening storm surge and catastrophic, record-breaking rain to southern Alabama and the Florida Panhandle. Hurricane Sally weakened to a tropical depression that day as it moved into Georgia before bringing post-tropical conditions to the Carolinas and southern Virginia. Preliminary insured property losses ranged from $1 billion to $3.5 billion, according to catastrophe modelers.

Photo of Hurricane Sally flooding provided by Spec. Jillian Munyon, of the Mississippi National Guard

Hurricane Reaction of National Guard Triggers Activations in North Carolina

Major Matthew Boyle of the North Carolina National Guard said its biggest weather-related activation this year occurred in response to Tropical Storm Isaias, Aug. 1-10. The state’s National Guard activated 123 members, used 41 vehicles, drove a total of 20,237 miles and incurred personnel costs of $121,802.81, he added.

The personnel formed 24 teams that provided route clearance, helped with stranded motorist and flood victim rescue using high-water clearance vehicles, offered swift water rescue support, provided warehouse and supply transport, gave shelter support and distributed food and water, Major Boyle said. They also engaged in communications and cyber support, critical site security, support to local law enforcement, helicopter aquatic rescues, helicopter transport and damage assessment over-flights and power generation help, he added. 

The teams, known as “force packages,” have functions and capabilities that easily can be billed to the state prior to a declaration of federal emergency, Major Boyle explained. This approach also is useful for the Federal Emergency Management Administration and the Department of Defense to track after a federal declaration, he continued.

Hurricane Reaction of National Guard Includes Virginia

The Virginia National Guard staged approximately 80 soldiers and 30 vehicles for state emergency support duty Aug. 3, at multiple locations in the eastern and central portions of the state. Personnel were ready to assist local authorities to respond to possible impacts from Tropical Storm Isaias in the Eastern Shore, Hampton Roads and Peninsula areas, as well as at key places along the I-95 corridor.

Soldiers were available with Humvees and light/medium tactical trucks for high water transportation. They also were equipped with chainsaws to remove debris, as needed, to help clear roads and assist in keeping traffic moving on Aug. 4, after Tropical Storm Isaias left a path of fallen trees and other objects at multiple locations across Virginia.

Hurricane Sally brought post-tropical conditions to the Carolinas and southern Virginia. Preliminary insured property losses ranged from $1 billion to $3.5 billion, according to catastrophe modelers.

On Feb. 7, Tazewell County officials sent Virginia National Guard Soldiers out for health and welfare checks on citizens for the delivery of water and locally donated food to people impacted by heavy rains and flooding. The Virginia Department of Emergency Management directed the National Guard to send soldiers with light/medium tactical trucks for high water transportation to assist local authorities, with soldiers staged and ready for duty less than 12 hours later.

Investment Guru Likes Home Building Stock Amid Hurricanes

Damage to homes may cause a bit of a rise in regional demand for builders that operate where the 2020 hurricanes hit. Jim Woods, a former U.S. Army paratrooper who later served in the National Guard, recommended Dallas-based LGI Homes, Inc. (NASDAQ:LGIH) to subscribers of his Bullseye Stock Trader advisory service on Aug. 27.

LGI builds homes in southern and mid-Atlantic states such as Texas, Alabama, Georgia, Florida, the Carolinas and Virginia that have a history of hurricanes. Woods, who also heads the Successful Investing and Intelligence Report investment newsletters, consulted with macro-analyst Tom Essaye of Sevens Report Research before advising the purchase of LGI Homes.

Map Shows States in Blue Where LGI Homes, Inc. Operates

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Source: LGI Homes

The National Association of Home Builders Housing Market Index surged to a record high in October as home construction boomed. The iShares Home Construction ETF (CBOE BZX: ITB) has jumped 34%-plus so far this year and further outperformance is likely as the trends in home improvement and new construction remain robust, Woods told me.

The rebound in residential housing numbers has been epic amid COVID-19, as three of four major residential housing indicators surpassed pre-pandemic peaks, Woods wrote when he recommended LGI Homes. 

Pending Home Sales, Existing Home Sales and Single-Family New Home Sales all have eclipsed previous highs. Indeed, New Single-Family Home Sales reached levels not seen since the mid-2000s. 

Only building permits remain below the pre-COVID peak, but just fractionally below. Another good number could let it join other major housing metrics in new-high territory, he predicted.

Hurricane Reaction of National Guard Is One Reason to Consider LGI Homes

Key reasons for the bright outlook in housing are clear, opined Woods, who has been listed as the #1 financial blogger in the world according to Tip Ranks. Mortgage rates are at all-time lows, and the Fed is providing liquidity to the mortgage market and is expected to do so for many years. In addition, social factors such as the COVID-19 pandemic and “protest-provoked migration” from urban centers to the suburbs is boosting demand for new homes, Woods added.

LGI topped Wall Street expectations in August when it reported quarterly results that produced a 21% earnings boost on revenue that climbed 4% to $481.6 million, compared to analysts’ estimates of a an 18% plunge in earnings per share on projected revenue of $462 million. The company also reported a 3% increase in home closings to 2,500.

Paul Dykewicz meets with Jim Woods to discuss investment ideas for 2020.

Home Orders Rise for Builder in Hurricane-Prone States

In July, LGI’s orders rose 60% compared to the same month last year. The company estimates full-year home closings of 8,000 to 8,800 with an average sale price between $245,000 and $255,000.

Chart courtesy of www.stockcharts.com

LGI Homes has a modest price-to-earnings (P/E) ratio of 9.42 but does not pay a dividend. Investors seeking capital gains may find the stock appealing, while others who want income through dividend payouts might prefer to look elsewhere.

Another stock that Woods is recommending is Lowe’s Companies, Inc. (NYSE:LOW), a home improvement retail chain headquartered in Mooresville, North Carolina. Lowe’s is a pick Woods included in the Income Multipliers portfolio of his Intelligence Report investment newsletter.

Chart courtesy of www.stockcharts.com

Income investors will appreciate that Lowe’s announced it would boost its payout by 9.1% to $0.60 from $0.55, payable on Nov. 4 to shareholders of record on Oct. 21. The new annualized dividend yield will be 1.48%, up from 1.36%. 

Lowe’s consensus forward P/E ratio is 20.62 and it is trading near all-time highs after its fiscal second-quarter results that handily beat analysts’ consensus expectations. Pessimistic analysts questioned the stock’s valuation and sustainability of its results, yet nearly all viewed Q2 results and trends for 2020 as strong.

Pension Fund Chairman Assesses Hurricane Reaction of National Guard

Pension fund Chairman Bob Carlson answers questions from Paul Dykewicz in an interview before social distancing became the norm after the COVID-19 outbreak.

Companies worth considering for investment amid natural disasters include a retailer that sells “survivalist supplies and equipment,” said Bob Carlson, head of the Retirement Watch investment newsletter and chairman of the Board of Trustees of Virginia’s Fairfax County Employees’ Retirement System with more than $4 billion in assets. Such a retailer should do well when people are “run out of their homes” or basic infrastructure in an area is unavailable for a while, Carlson added.

Sportsman’s Warehouse Holdings (NASDAQ: SPWH) fits that description as a retailer that sells products sought by “survivalists,” Carlson said. The company also may be the only major retailer remaining that will sell guns and ammunition, since Wal-Mart (NYSE:WMT) and Dick’s Sporting Goods (NYSE:DKS) stopped doing so. 

Roughly half the sales of Sportsman’s Warehouse Holdings come from guns and related accessories, Carlson added. Plus, it is opening new stores and cut its debt last spring, he added.

The stock has rebounded recently after tumbling in September, but it still has not regained its previous high, Carlson continued. Its P/E ratio is reasonable at 14.16, he added.

Chart courtesy of www.stockcharts.com

Money Manager Finds Stocks to Recommend Amid Hurricane Reaction of National Guard

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Hilary Kramer, host of a national radio program, Millionaire Maker,” and head of the GameChangers and Value Authority advisory services, said most companies include natural disasters such as hurricanes as a risk factor. For that reason, Kramer said she tends to zero out all the potential negative catalysts, since nature can interfere with almost any business except for pure cloud computing companies, she added.

Columnist and author Paul Dykewicz interviews money manager Hilary Kramer, whose premium advisory services include 2-Day TraderTurbo Trader, High Octane Trader and Inner Circle.

“If you’re afraid of the weather, just buy Microsoft Corp. (NASDAQ: MSFT),” Kramer advised. “And if you feel like the weather is getting worse, practically all stocks share in the drag. Disruptions happen. Companies pick themselves up after a storm, earthquake or fire and get back to work.”

Microsoft currently pays a 1.04% dividend yield and trades at a P/E of 32.6. The valuation is high for a typical stock but not beyond the pale for a still-growing technology giant such as Microsoft.

Chart courtesy of www.stockcharts.com

Certain companies can prosper when the weather gets rough and even make money helping others cope with the changes, Kramer said. A review of all the Securities and Exchange Commission (SEC) filings this year will reveal a few stocks that sell more emergency products and services during hurricanes and other disasters, she added.

“The purest play is probably Hawkins Inc. (NASDAQ: HWKN), which makes water purification systems. When floods overwhelm existing infrastructure, HWKN books more business.”

Hawkins offers a dividend yield of 1.82% and a P/E ratio of 16.34. It recently pulled back and gives investors a better entry point near $51 a share than the $59.05 a share it traded at in August. 

Chart courtesy of www.stockcharts.com

“When wildfires hit the California power grid, Bloom Energy Corp. (NYSE:BE) naturally sees demand for residential power storage surge,” Kramer said. “If you see the Gulf staying stormy and the West staying hot, these are two natural opportunities.”

Bloom does not pay a dividend, so income investors may want to consider a different stock to purchase. The company also announced in July that it would not be providing third-quarter guidance due to the uncertainties stemming from the global economic impact of COVID-19.

Chart courtesy of www.stockcharts.com

“When it’s a matter of finding people lost in the weather, I always have time for FLIR Systems Inc. (NASDAQ: FLIR), which provides the National Guard and other organizations with search & rescue systems,” Kramer said. The stock offers a dividend yield of close to 2% right now and that’s worth locking in for income investors, she added. 

The stock also has pulled back from its 2020 high of $58.06 to $35.25. With a 1.88% dividend yield and a modest P/E ratio of 15.11, it may be a worthwhile holding for income investors.

Chart courtesy of www.stockcharts.com

Damage caused by severe storms in 2020 has been exacerbated by the COVID-19 pandemic that led to the infection of President Trump and forced his hospitalization Friday, Oct. 2, until Monday, Oct. 5. In total, there have been 8,274,797 cases and 221,076 deaths in the United States, along with 40,792,599 cases and 1,124,918 deaths worldwide, as of Oct. 21, according to Johns Hopkins University. America has endured the most cases and deaths by far of any country.

For investors worried about the risk of hurricanes and other severe storms but wanting to stay invested in the stock market, the equities featured in this write-up are worth considering for purchase. Anytime the National Guard is activated to help respond to a severe storm, the damage will be significant, and investors may want to seek shelter not just for themselves but their portfolios.

Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street JournalInvestor’s Business DailyUSA Today, the Journal of Commerce, Seeking Alpha, GuruFocus and other publications and websites. Paul, who can be followed on Twitter @PaulDykewicz, is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Paul also is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. The book is endorsed by Joe Montana, Joe Theismann, Ara Parseghian, “Rocket” Ismail, Reggie Brooks, Dick Vitale and many others.

 

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