It looks like Hurricane Milton is forming into a force 5 beast of a storm. From MSN:
“Milton, currently a Category 4 hurricane, is forecast to strengthen to a Category 5 within a few hours.
Milton is expected to weaken to a Category 3 hurricane by the time it reaches the Florida coast on Wednesday night. Landfall is expected late Wednesday or early Thursday.
Storm surge is a major threat.
A record-breaking storm surge of 8 to 12 feet is forecast for the Tampa Bay area. This comes as Floridians are still cleaning up from the record-setting 6 to 8 feet of storm surge that was just unleashed by Hurricane Helene.”
Hurricane Stocks
My favorite way to play major storms that take out power for weeks is to buy Generac Holdings (GNRC). It always pops on a looming hurricane or blizzard. Though you have to get in early.
The GNRC $185 calls that expire this Friday, October 11, are up a whopping 1,800% today.
Generac makes generators for houses and offices. I have one myself, though it stopped working last year. Apparently, you need to change the oil in those things…
Generac’s share price went crazy during COVID and shot up to $500 for some reason. It is now back down to a reasonable valuation with a forward PE of 18 and a PEG ratio of 1.19.
Oil Impact
Hurricanes in the Gulf of Mexico used to spike the price of oil. GOM is a major oil production center. It made up 14% of all oil, and 2% of natural gas produced in the U.S. last year. Historically they shut down all offshore platforms and evacuated the people.
There are also vulnerabilities to oil refineries. Half of the U.S. refiners are on the Gulf Coast in Texas and Louisiana, which are prone to flooding.
WTI crude is now at $77 a barrel and Brent crude is over $80. I’m not seeing a lot of headlines regarding Milton and the price of oil, however – most of the price movement is being blamed on the pending war between Iran and Israel. If Israel hits Iran’s oil infrastructure prices will go much higher quickly.
If Iran decides to blow up Saudi infrastructure it will go up even more.
ExxonMobile is my largest oil holding at the moment. The chart shows that it just broke out of a two-year consolidation pattern, dating back to late 2022.
ExxonMobile is the best-run oil and gas company in the world. It is reasonably priced with a forward PE of 13 and it pays a 3% dividend.
ExxonMobil made $9.2 billion in the second quarter of 2024 and $9.1 billion in earnings in the third quarter of 2023. However, they recently warned that low prices in the current quarter may decrease their revenue by $1 billion.
Despite this, the stock is ripping higher which is very bullish. That chart is a flashing green buy.
All the best,
Christian DeHaemer
Outsider Club
XOM Warning:
https://finance.yahoo.com/news/exxonmobil-warns-1b-hit-q3-151800641.html
Brit is Buying:
https://www.outsiderclub.com/did-you-buy-this-stock/
Fake Jobs Numbers:
https://www.outsiderclub.com/but-baby-i-cant-find-no-job/
