Five interesting things that Hodges Capital research analysts discovered this week...

#1 CLASSIC CARS: The average age of cars and light trucks in the U.S. has reached a record high of 12.6 years in 2024, up roughly two months from last year, according to S&P Global Mobility. The U.S. vehicle fleet surged to 286 million vehicles in operation in January, up 2 million from 2023, but the distribution of vehicles by age is changing. Vehicles under the age of six accounted for 98 million vehicles in 2019, or about 35 percent of vehicles in operation. Today, they represent less than 90 million vehicles and are not expected to reach 2019 levels until 2028. 

#2 SURGE IN POWER DEMAND: After a decade of flat power growth in the U.S., electricity demand is forecast to grow as much as 20% by 2030, according to a Wells Fargo analysis. AI data centers alone are expected to add about 323 terawatt hours of electricity demand in the U.S. by 2030. The forecast power demand from AI alone is seven times greater than New York City’s current annual electricity consumption of 48 terawatt hours.  Goldman Sachs projects that data centers will represent 8% of U.S. electricity consumption by the decade's end. Natural gas could be a big beneficiary as solar and wind alone may be inadequate to meet the demand. 

#3 NICHE OPPORTUNITY: According to Norwegian Cruise Line Holdings, cruise vacations represent only 2% of the travel and tourism industry. It would take 21 of Norwegian’s newest and largest ships to fill 1% of the U.S. hotel rooms. Management is optimistic about the future as they are seeing strong website traffic, an increase in new-to-cruise travelers, and an increase in a younger demographic. 36% of the Company’s travelers are now under the age of 40. 

#4 AGING HOUSING STOCK: Toll Brothers noted in its second quarter call that the median age of an existing home in the U.S. is now over 40 years old. Approximately 60% of existing homes were built before 1980, and 35% were built before 1970.   

#5 SOARING INSURANCE RATES: According to the Dallas Morning News and LendingTree, Texas home insurance rates have increased by 54.5% from 2019 through March 2024. Only Arizona, Nebraska, Illinois, and Utah saw larger cumulative increases during that time. Home insurance rates in the U.S. are up 37.8% over the same period. The rate increase was primarily driven by rising home prices and an increase in extreme weather events. Wind and hail accounted for 42.6% of insurance claims between 2017 and 2021 nationwide. Texas had 16 confirmed weather/climate disaster events, with losses exceeding $1 billion last year.

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