We recently published a list of 10 Best Hurricane and Natural Disaster Stocks To Buy Now. In this article, we are going to take a look at where AECOM (NYSE:ACM) stands against other best hurricane and natural disaster stocks to buy now.
The 2024 hurricane season is shaping up to be a highly active one, especially in the North Atlantic. Forecasts suggest that the number of tropical cyclones this year could exceed the long-term average. Although it’s difficult to predict how many storms will make landfall and where they will hit, a higher number of storms increases the chances of multiple landfalls, posing a significant risk to the Gulf of Mexico and Caribbean Sea regions.
Leading research institutes expect approximately 23 named cyclones in the North Atlantic this year, with 11 potentially developing into hurricanes. Of these, five could become severe hurricanes with wind speeds exceeding 110 mph. These estimates are considerably higher than the long-term average observed between 1950 and 2023, which was 12 named storms, 6 hurricanes, and nearly 3 severe hurricanes each season.
Sea surface temperatures in the tropical North Atlantic are currently at record highs, between 0.5 and 1.0°C above the historical average, creating conditions favorable for hurricane development. Furthermore, the natural climate oscillation ENSO (El Niño/Southern Oscillation) is expected to shift to a La Niña phase. This shift typically reduces high-altitude wind shear, which in turn makes it easier for tropical cyclones to develop and intensify.
Given these factors, the likelihood of severe hurricanes making landfall this season is heightened. This means that companies involved in infrastructure, construction, insurance, and emergency response could see increased demand for their products and services. Hurricanes not only cause billions of dollars in property damage but also disrupt various sectors, from utilities and energy to real estate and transportation. Thus, investing in companies that specialize in disaster recovery, property restoration, and related services could be a strategic move.
In this article, we will explore the ten best hurricane and natural disaster stocks to buy now. These companies are well-positioned to benefit from the potential increase in hurricane activity and the demand for services that follow in the wake of natural disasters. Whether through providing emergency equipment, offering insurance coverage, or assisting in rebuilding efforts, these stocks could present an opportunity for investors looking to hedge against the financial impacts of natural disasters.
Sources like Munich Re, the World Meteorological Organization (WMO), and the International Labour Organization (ILO) have provided valuable insights into the 2024 hurricane season, highlighting the increased risks and potential economic impacts. With that in mind, let’s dive into our list of the best stocks to consider for this hurricane season.
Our Methodology
The companies featured in this list are known to experience increased demand following hurricanes and natural disasters. To provide prospective investors with valuable insights, we’ve also highlighted key business fundamentals and analyst ratings for these stocks. Additionally, we reviewed data from approximately 912 elite hedge funds tracked by Insider Monkey during the second quarter of 2024 to determine hedge fund ownership for each company. From this dataset, we selected the top ten stocks most favored by institutional investors and ranked them in ascending order based on the number of hedge funds holding stakes in these firms as of Q2 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A worker in a hard hat and safety gear overseeing the construction of a major energy project.
AECOM (NYSE:ACM)
Number of Hedge Fund Holders: 32
AECOM (NYSE:ACM) is a global provider of infrastructure consulting services, operating across three main segments: Americas, International, and AECOM Capital. The company offers a broad range of services, including planning, architectural and engineering design, construction management, and investment in real estate projects. Given its involvement in infrastructure and disaster management projects, AECOM (NYSE:ACM) is a key player in the hurricane and natural disaster segment, making it an ideal inclusion in this list of the best hurricane and natural disaster stocks to buy now.
AECOM (NYSE:ACM) financial performance in the third quarter of 2024 was exceptional, demonstrating strong growth and resilience. The company reported an 8% year-over-year increase in net service revenue (NSR) and a 16% rise in adjusted EBITDA, reflecting the company’s ability to capitalize on a robust pipeline of opportunities in critical markets like water and transportation. Furthermore, adjusted EPS increased by 23% for the quarter, reinforcing the company’s solid financial foundation.
One of the key highlights of the earnings report was the company’s strong cash flow generation, with free cash flow up by 32% year-to-date. This financial strength enables AECOM (NYSE:ACM) to continue allocating resources toward share repurchases, investments in high-return growth opportunities, and maintaining dividend payments. The company has repurchased $200 million worth of stock since the end of the second quarter, illustrating its commitment to shareholder value.
AECOM (NYSE:ACM) backlog, which is at a record high, provides significant visibility into future revenue streams and supports the company’s growth outlook. The firm’s pipeline in its core markets is robust, with a 20% growth in its program management pipeline and a 45% increase in its water-related pursuits. This visibility and growth potential underpin AECOM (NYSE:ACM) updated fiscal 2024 guidance, with the company now expecting 21% adjusted EPS growth at the midpoint.
As of Q2 2024, the number of hedge fund holders of AECOM (NYSE:ACM) was 32, a slight decline from 34 in the previous quarter. However, this minor fluctuation does not overshadow the company’s strong fundamentals and strategic positioning, making AECOM (NYSE:ACM) a solid investment opportunity in the hurricane and natural disaster sector.
Overall, ACM ranks 8th on our list of Best Hurricane and Natural Disaster Stocks To Buy Now. While we acknowledge the potential of ACM to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ACM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.