Likely winners and losers of this weekend's blizzard
Natural disasters and severe inclement weather create significant opportunities for equities, both positive and negative.
Boston's WHDH meteorologist, Pete Bouchardon is on record calling the storm potentially "epic." That was enough for airlines to cancel flights.
So far, based on weather forecasts alone, airlines have canceled more than 3,300 flights according to CNN. Carriers announcing schedule changes before the arrival of the nor'easter included Delta Air Lines (DAL), United Continental Holdings (UAL) and JetBlue (JBLU). All three have hubs or bases in the New York area, the busiest U.S. aviation market.
Among those expected to profit from this storm are grocers and hardware stores as people go to stock up on food, batteries and flashlights ahead of big storms. Stores such as Home Depot (HD) and Lowe's (LOW) may see an uptick in same-store sales.
If consumers are stuck in their homes, shopping goes online and companies such as Amazon (AMZN) and eBay (EBAY) could see an increase in purchase, perhaps even enough to lift first quarter earnings if the storm proves to be as big and devastating as forecasters are predicting.
Pizza delivery drivers who can brave snow more than two feet high in some areas are likely to see big tips, and so will the companies that employ them. Papa John's (PZZA) and Domino's Pizza (DPZ) will likely be winners over the weekend. (If only Starbucks (SBUX) delivered!)
Where there are winners, there are losers and the airlines aren't the only ones on the losing side. Those invested in operations that require foot traffic might be disappointed when first quarter earnings season arrives. Movie theaters like Cinemark (CNK) and Regal Entertainment (RGC) will likely lose the weekend's revenue with the storm expected to last well into the weekend.
Will insurance stocks take a hit? Not likely. Superstorm Sandy, and the $62 billion in losses that came with it, was responsible for the most insurance claims of any event in 2012, according to the Associated Press.The losses were large but insurers such as Allstate (ALL) and Travelers (TRV) had ample reserves to cover the storm.
Insurance stocks tend to see small selloffs around large weather events but quickly recover once it becomes clear that it's just another day at the office for insurers.
This storm may also be blamed for any slide in first quarter GDP. Just as Superstorm Sandy seemed to make its way onto the list of excuses for poor performance among corporations all over the country, Friday's blizzard may be the first quarter scapegoat if numbers come in below expectations.
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Stocks are facing some serious resistance as the bears tear into the market's respite.
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