Teresa Rivas

The heat wave may reveal some stocks primed for a hot streak.

As temperatures surge in much of the U.S. this week, it's a reminder of how disruptive extreme weather events and natural disasters can be. They're costly too, with global losses of some $368 billion in 2024 alone -- a figure being pushed up by the increase not only in temperatures, but also population and development in risk-prone areas, writes Sara Mahaffy, RBC Capital Markets' head of global sustainability strategy research, in a note Monday.

It's little wonder then that companies are paying attention, with mentions of extreme weather during earnings calls hitting new highs this year in the U.S. and Asia. Moreover, the Trump administration's antagonistic stance toward climate change has caused further uncertainty about U.S. preparedness for and response times to disasters, Mahaffy notes.

That said, there are companies that are proactively tackling the issue, to their benefit as well as that of their shareholders. This can include helping customers prepare and respond to extreme events via building cooling, weather forecasts, disaster response, energy preparedness, land management, and water resilience.

And while the current environment has been difficult for companies tied to the green economy, such as renewable energy, many of the companies that fall into this more proactive category "have outperformed the broader market this year, helped by the fact that they tend to have a higher-quality bias and have seen very constructive revisions momentum trends recently," Mahaffy writes.

Screening the Russell 3000 for companies' sustainability reports, presentations, and transcripts to identify names discussing tailwinds as it relates to adaptation and resilience produced 118 stocks, but out of those just 29 are rated at Outperform by RBC analysts.

Azek, Carrier Global, Chemours, Owens Corning, Sherwin-Williams, and Westlake are in the building resilience and cooling category. Among weather forecasting, climate modeling, and risk analytics are Autodesk, Bentley Systems, MSCI, S&P Global, and Verisk Analytics. She highlights disaster-response names Aecom, Jacobs Solutions, Primo Brands, Republic Services, and Tetra Tech.

Aecom, Jacobs, and Tetra also make the energy and grid resilience list, along with Bloom Energy, Emerson Electric, Eaton, nVent Electric and Nextracker. Aecom, Jacobs, and Tetra Tech also appear in the list of water resilience names, which also includes Badger Meter, Core & Main, DuPont de Nemours, Ecolab, Ferguson Enterprises, Pentair, and Xylem.

Corteva is the only stock that makes the cut in the land management and agricultural resilience category.

Sweating through this week may be inevitable, but investing in extreme weather-related stocks can help make summertime living -- and investing -- easy.

Write to Teresa Rivas at teresa.rivas@barrons.com

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June 23, 2025 12:26 ET (16:26 GMT)

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