Heat Waves: The Stocks that are Getting Hot
Heat waves, along with increasing daily record temperatures, are the new “hot” topics. Seville, Spain, which became the first city in the world to introduce a local heat wave naming and ranking system, declared “Yago” as its second ever named heat wave in June. 1 Combating the negative effects of excessive heat is the goal of individuals and municipalities. Short term fixes combined with longer term projects will be needed to get relief from this ongoing climate emergency.
In the short term, air conditioners (AC) help alleviate the heat. From window units to whole house or building systems, these are usually the first step to comfort. Once considered a luxury, air conditioning has evolved to becoming a necessity. As communities experience health problems, including deaths, they have ramped up cooling stations to allow residents some relief from excessive heat. Cities such as New York City to Seattle and Detroit to Houston have designated cooling stations in public buildings like libraries, recreation centers, senior centers, or churches. Stores like Home Depot Inc*, Lowes*, Wesfarmers Ltd*, Hornbach Holdings*, and Kingfisher* brands are popular air conditioner retailers for quick relief.
However, continuous air conditioning can put a strain on energy grids resulting in power outages. Generac Holdings Inc* saw a rising demand for backup power generators in Texas as temperatures surged.2 The demand for power during heat waves has shown the need for improvements to the energy grids to prevent outages. Fortunately, there are companies that work on energy grids such as Eaton*.
Heat Island Mitigation
Seeking ways to reduce heat in cities is becoming a priority. When trapped heat builds up, it creates what are known as Heat Islands or Urban Heat Islands, commonly found in cities. Solutions involving increased vegetation such as trees and gardens, light colored roofing materials, sidewalks, and roads, and water elements such as fountains, have been helpful in lessening the harm due to heat waves. Trees provide shade which can ultimately lead to lower temperatures and reduced energy consumption.
- AECOM* has a history of creating rooftop gardens in Shanghai, New York City and Washington, D.C. Meanwhile experiments in Los Angeles and other cities have encouraged switching to new light-colored construction materials which repel rather than absorb heat.
Many companies are involved in simulation services to anticipate the effect of changing weather conditions on cities, infrastructure, and the environment:
- Nvidia Corp* does research and modeling for extreme weather and climate predictions.
- SNC Lavalin Group Inc* offers its Atkins City Simulator to simulate a city as it grows amid weather influenced disasters. It measures the impact of potential disasters versus proposed solutions to select projects with the highest return on investment.
- Stantec* strives to make energy systems more efficient and resilient. It utilizes data analysis and remote sensing models to help cities optimize heat mitigation investments.
- Hexagon AB* used digital reality modeling to determine the effect of heat on athletes prior to the Tokyo Olympics.
Anticipating and providing solutions to natural disasters such as heat waves, wildfires, floods, hurricanes, and earthquakes is the aim of the companies within FIXT, The Procure Disaster Recovery Strategy ETF. FIXT was created to provide exposure to companies that are engaged in the recovery from and prevention of destruction from natural disasters. As weather related disasters increase in frequency and destruction, companies will be busy helping communities get ‘FIXT.’ When disasters happen, think FIXT ETF.
1 “World’s Second Named Heat Wave Strikes Spain”, by Chelsea Harvey, www.ScientificAmerican.com, June 28, 2023.
2 “Generac Sees Rising Demand for Backup Power Generators During Texas Heat Wave,” by Mark Chediak, www.bloomberg.com, June 27 ,2023.
*As of July 10th, 2023, AECOM (ACM) was a 2.07% holding, Eaton (ETN) was a 2.13% holding, Generac (GNRC) was a 2.34% holding, Hexagon AB (HEXAB SS) was a 1.95% holding, Home Depot (HD) was a 1.99% holding, Hornbach (HBH GR) was a 2.06% holding, Kingfisher (KGF LN) was a 1.91% holding, Lowe’s (LOW) was a 2.13% holding, Nvidia (NVDA) was a 2.19% holding, SNC Lavalin Group (SNC CN) was a 2.09% holding, Stantec (STN CN) was a 2.11% holding, Wesfarmers Ltd (WES AU) was a 1.98% holding, in the Procure Disaster Recovery Strategy ETF (NASDAQ: FIXT).
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