Stocks

Taking Advantage of Hurricane Season

By Adam O'Dell  |  September 19, 2018

I spent a lot of money last hurricane season.

We lived on Islamorada – a 4-mile long, quarter-mile wide island in the middle of the Florida Keys – just 50 miles northwest of where the eye of Hurricane Irma made landfall.

Here’s a screenshot I took on the morning of September 10 as the Category 4 storm pummeled my home…

Note: KW = Key West. LT = Little Torch (official landfall). ISLA = Islamorada (my house). MIA = Miami.

It was a harrowing experience.

And an expensive one!

As we prepped our house for the storm… evacuated to Orlando to avoid it… and then returned home to assess and repair the damage… we spent a good deal of money on stuff I’ve barely used since.

Fifteen sheets of ¾-inch plywood ($600)… 24-foot extension ladder ($250)… 10,000-watt portable gas generator ($950)… six 5-gallon gas cans ($200)… 8,000 BTU window A/C unit ($250)… flashlights, lanterns, and batteries ($300)… two Yeti coolers ($600)… tarps ($100)… 18-inch chainsaw ($250)… 16-gallon wet/dry shop-vac ($100)…

I’m probably forgetting some things, but you get the idea.

Home Depot LOVES Hurricane Season

Hurricane season is predictable.

It officially runs from June 1 to November 30 each year. August, September, and October make up the meat of the season. And September 10 marks the seasonal peak.

Here’s a chart showing the seasonality of hurricanes…

As I said, hurricane season is a rather predictable phenomenon.

Each and every year, between August and October, you can expect increased odds of a storm heading your way.

That’s what “seasonality” is all about – increased (or decreased) odds of something happening based on what has historically tended to happen, with above- (or below-) average frequency during that time of the year.

And it works just the same in the stock market, which is why seasonality is one of the three primary factors I consider in my Cycle 9 Alert service.

Home-improvement retailer Home Depot (NYSE: HD) was the primary benefactor of my hurricane-spurred spending spree last year. I spent several thousand dollars that I otherwise wouldn’t have.

But last year wasn’t a one-off boost for the home-improvement giant.

In fact, over the last 20 yearsshares of Home Depot (HD) and Lowe’s (LOW) have enjoyed a seasonal tailwind during peak hurricane season.

Have a look for yourself…

This chart shows the average profits earned from Home Depot, if you buy shares at the start of each calendar month and hold them for three months.

And this chart shows the very similar seasonal tendency for Lowe’s…

Clearly, both Home Depot and Lowe’s have enjoyed a seasonal boost, during hurricane season, for the last 20 years.

And whether or not you believe that’s solely because of harried hurricane preppers… you can use this seasonality factor to your advantage, potentially making above-average profits in a short amount of time.

I happen to believe there are other factors influencing this pattern of seasonality for Home Depot and Lowe’s. Consider the seasonality in residential home buying…

Most folks don’t want to uproot their kids in the middle of a school year. So the summer months tend to see an increase in home sales… with the heightened buying activity trailing off come September, once school starts back (and coincidentally, as hurricane season begins).

It’s reasonable to think Home Depot and Lowe’s enjoy a boost from this seasonal buying pattern into residential real estate, too, in addition to the seasonal tailwind of hurricane season.

Anyone who bought a new home in the summer months is likely to spend a little more on landscaping and home projects soon after. And those staying put in their current home are likely to take advantage of cooling temperatures to get work done, before winter hits.

So it’s entirely possible that both hurricane season and the end of home-buying season work together to spur above-average gains in the stocks of Home Depot and Lowe’s.

Though, no matter what the reason, the data clearly show a season of strength for these stocks.

If you spent a lot of money last hurricane season, or this one… buying a home-improvement retailer during its “peak” season could help you make some of it back, and more!

Adam O'Dell

As Chief Investment Strategist for Dent Research, Adam O’Dell has one purpose in mind: to find and bring to subscribers investment opportunities that return the maximum profit with minimum risk. He achieves this with his perfect blend of technical and fundamental analysis.MORE FROM AUTHOR