As the weather improves in the northern hemisphere, barbeques, garden furniture and beer coolers are starting to come out, and the atmosphere is turning more relaxed. But unfortunately over the last few years massive floods, raging fires and extreme weather have seemingly become not only more frequent but also larger scale.
What used to be the most pleasant months of the year are now becoming a bit more unpredictable. In July 2021 the rains which triggered a series of flash floods in the UK later travelled to Europe causing catastrophic floods and a serious death toll in Germany, Belgium and at least another eight European countries. In the years when rains were not extreme Europe instead faced the droughts which triggered almost equally damaging forest fires.
Last year’s forest fires in the US made for extremely disturbing viewing, raging across large swathes of the US and Canada. Equally, the US hurricane season brings with it large amounts of damage.
Who leads the post-disaster rebuilding efforts?
While saving people and property should be first priority, there is also a way of investing in companies which are involved in the recovery and repair after major destructive weather events. The most obvious ones are providers of construction materials such Travis Perkins (LSE:TPK) and the home improvement specialist Kingfisher Group (LSE:KGF), which through its chains B&Q, Screwfix, Castorama and Brico Depot sells not only in the UK but also France, Poland and Romania.
In Europe, the two leaders in the field are the French construction materials giant Saint Gobain (Paris:SGOB) and Germany’s Heidelberg Cement (XETRA:HEIG). After two years of Covid the European construction and home development sector is not particularly loved by investors and many companies on this list trade between 20% and 30% lower on the year. This discount could be an interesting entry point.
In the US, the three main retailers which see an uptick in demand following severe weather situations are Lowe’s Companies (NYSE:LOW), the Home Depot (NYSE:HD) and Walmart (NYSE:WMT). Of these three companies only Walmart is trading higher on the year while Lowe is down 20% year-to-date but trading up 4% on the year.
Subscribe for more stories like this, 8am weekdays - for free!
Who brings the power back?
The next group of companies are those producing either batteries or generators. In the UK this is Scottish firm Agrekko (LSE:AGK) which produces generators of different sizes, in the US the two leaders are Cummins (NYSE:CMI) and Caterpillar (NYSE:CAT).
After the floods and the wildfire comes a large clean up and a challenging process of waste disposal followed by reconstruction. Rentokil (LSE:RTO) plays a significant part in post flood waste disposal in the UK, while the majority of other contractors are not listed companies.
In terms of reconstruction in the US two companies play a significant role, AECOM (NYSE:ACM) and Fluor (NYSE:FLR), major engineering companies which are also government contractors. The former works on projects like motorways, bridges and water facilities, while the later is involved in procurement and construction.
There is also a host of smaller European companies, which are involved in some aspect of disaster relief such as DroneHopper , a Spanish firm which manufactures heavy-duty drones used for wildfires and urban firefighting, and VanderSat , a Dutch provider of satellite-observed water data that show water vulnerability of any location on the planet.