Concern about the progress of an Atlantic storm lifted shares of companies that might benefit should rebuilding or emergency power be required.
Home Depot Inc. and Lowe’s Cos. were up 2.3 percent and 3.2 percent, respectively, in early trading Thursday as Hurricane Joaquin’s path came closer to threatening the East Coast. That’s the home improvement retailers’ largest gain in as much as a month.
Mooresville-based Lowe’s is the nation’s second-biggest home improvement retailer, right behind Home Depot.
Generac Holdings Inc., a portable generator maker, surged 10 percent, its best performance since since February 2014. The Standard & Poor’s 500 Index gained 1.9 percent Wednesday.
Digital Access for only $0.99
For the most comprehensive local coverage, subscribe today.
“As far as driving people to Home Depot or wherever to buy a portable generator, or six months down the road they decide to buy a home-standalone one, hurricanes have been the best creators of awareness,” Stanley Elliott, an analyst Stifel Nicolaus & Co. said by phone. “Generac benefits when there are high levels of outage activity because it generates awareness around products.”
Joaquin was upgraded to a Category 3 hurricane Wednesday night and had maximum sustained winds of 115 mph, according to the National Hurricane Center in Miami. It is forecast to cross the Bahamas Thursday.
The Charlotte region has been placed under a flash flood watch beginning Friday morning and ending Sunday night, as forecasters said Joaquin could deliver four to eight inches of rain. Officials say residents should monitor the storm and identify flood risks in their homes.
As far as storms go, hurricanes tend to be the biggest boon for home construction companies, according to Elliot, and cause more power outages than tornadoes or ice storms.
In the week leading up to Hurricane Sandy in October 2012, Generac gained 11 percent. Home Depot gained 4.3 percent in the November aftermath, while Lowe’s gain 6.2 percent in the same period. The S&P 500 index fell 0.3 percent in November 2012.
“The projected path looks like the same projected path as Sandy which was a real benefit for Home Depot and Lowe’s in the aftermath,” Jaime Katz, an equity analyst at Morningstar Investment Service in Chicago, said by phone. “I can’t speculate how event-driven traders think but this could sway profitability one way or the other with earnings and that could certainly move the stock.” The Observer contributed.