Active 2024 hurricane season helps Home Depot, Lowe's but hurts CarMax: analyst

By Steve Gelsi

Mizuho analyst eyes stock impact for more hurricanes after Beryl makes landfall

An active 2024 hurricane season will likely help sales at Home Depot Inc., Lowe's Cos., Floor & Decor Holdings Inc, and Tractor Supply Co. but hurt used car seller CarMax Inc., analysts at Mizuho said Thursday.

Analyst David Bellinger said these names "could see outsized impacts" now that the National Oceanic and Atmospheric Administration has forecast an 85% chance of an above-normal hurricane season, with Hurricane Beryl making landfall in recent days.

NOAA expects more than 25 major storms moving through the Atlantic this year, Bellinger noted.

Tractor Supply (TSCO), Lowe's (LOW) and Home Depot (HD) "have all typically seen a near-term sales uplift from hurricane prep activity" as demand rises for lumber and generators, he said.

In the wake of big storms, these suppliers also benefit from " more substantial and potentially elongated clean-up and rebuilding process using materials such as flooring stocked by Floor & Decor (FND), he said.

On the down side, CarMax (KMX) "could be prone to dislocations in used vehicle pricing and a potential break in the recent deflationary trends seen across the sector," Bellinger said.

Pressers on affordability could rise even with a minimal rise in vehicle prices, he said.

Home Depot's stock has risen 0.7% so far in 2024, while Lowe's is down 0.8%.

CarMax is up about 0.3% in 2024, while Tractor Supply has rallied by about 20.6% so far this year. Floor & Decor has fallen 18.2% in 2024.

By comparison, the S&P 500 SPX is up by 18.1% and the Nasdaq is up by 24.2% so far this year.

-Steve Gelsi

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07-11-24 0733ET

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