Hurricane Ian weakened to a tropical storm Thursday morning as it pushed northeastward across Florida, leaving more than 2.4 million residents without power. It intensified to a strong Category 4 hurricane before making landfall on Florida's southwestern coast on Wednesday. Ian is on course to carve into Georgia and parts of the Carolinas, hammering them with destructive rains and flooding. Initial winds were estimated near 155 mph, but have slowed to 50 mph to 70 mph.
Meanwhile, home improvement retailers Home Depot, Lowe's and generator maker Generac surged in expectations of possible demand generated by the storm.
On Tuesday, Hurricane Ian wiped out all power for Cuba's 11 million residents after passing the island as a Category 3 event. South and central Florida will face the brunt of the storm this week as it heads for North Carolina Friday morning.
Orlando, Tampa Bay and Jacksonville could see between 10 and 20 inches of rain, National Oceanic and Atmospheric Administration (NOAA) data showed. Florida's southwest coastline may face 12-foot to 18-foot waves from storm surge.
Parts of Florida face extreme flooding Thursday. Orlando shattered its 24-hour rainfall record, seeing 11.94 inches by 4 a.m. Wednesday. While other parts of the state have already experienced more than 14 inches of rain.
Meanwhile, water levels in southwestern Florida are starting to fall after Fort Myers and Naples broke storm surge records. On Thursday morning, the National Weather Service reported Ian should weaken to a tropical depression over North Carolina by Saturday afternoon and dissipate Sunday morning. While winds and sea levels should diminish across the region Saturday and Sunday.
Assessing Potential Damage
Housing research firm CoreLogic says 1.04 million homes lay in Hurricane Ian's path. Total reconstruction value could top $258.3 billion in the event of a worst-case scenario storm surge. Potential damages could cost the Orange State upward of $67 billion according to estimates from data modeling firm Enki Research.
On Tuesday afternoon, Gov. Ron DeSantis ordered mandatory evacuations for 12 coastal communities representing roughly 2.5 million residents.
The Federal Emergency Management Agency uses a "Waffle House Index" to gauge the destructiveness of a particular storm and how long the recovery time might be. The dining chain has a notorious reputation for staying open or reopening quickly in the wake of natural disasters. FEMA tracks how many Waffle House stores are open, limited or closed in given areas to measure severity. According to reports, 21 of Florida's 185 Waffle House locations were closed from Naples to Manatee County as of Wednesday morning.
Stocks That Weather The Storm
Home improvement retailers are one of several industry groups that often rally during and after major storms. Sales of plywood, generators and storm-preparedness products spike ahead of dangerous weather. Materials for repairs end to be in high demand whenever the tempest subsides. Wholesalers like BJ's Wholesale and groceries see a boost in sales as people stock up on food, water and non-perishables in case of power outages and supply interruptions.
Meanwhile, storm damages and shutdowns often negatively impact insurers, retailers and tourism. On Wednesday, President Biden warned oil companies not to increase gas prices or gouge Americans. And and said his administration would conduct investigations if they rise. Rigs in the Gulf of Mexico have suspended operations as Hurricane Ian moves through. But the amount accounts for less than 2% of America's total production.
Home Depot stock rallied more than 5% Wednesday, while Lowe's climbed 3.8%. GNRC swung 4.6% higher, even as Jefferies noted risk to its 2023 outlook and initiated a hold rating on the stock.
Jefferies analyst Saree Boroditsky said generator demand could decline in 2023 after accelerating during the pandemic, "given lower outages, a weaker housing market and pull forward in demand."
You can follow Harrison Miller for more stock news and updates on Twitter @IBD_Harrison
