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4 Insurance Stocks for Stormy Weather

MINNEAPOLIS (Stockpickr) -- A rare tornado in Massachusetts last week increased the death and destruction for this year's storm season. Considering we have yet to reach hurricane season, we could be on the verge of some truly earth-shattering numbers this year. The human and economic impact is already large and getting larger.

What about the impact on stocks? Could Mother Nature's wrath provide an opportunity for traders and investors?

With property and casualty insurance stocks, the knee-jerk reaction here is to sell, under the assumption that higher-than-anticipated storm damage will eat into future profits. Let's look beyond that obvious analysis today and take a deeper look at stocks in this category to determine where investors should go from here.

Related: 5 Strength Plays for June's Weak Market

My guess is that the market is overreacting to events in the news. Far from being efficient, the market tends to get emotionally irrational during extraordinary events like we are seeing with the spring's unusual tornado activity. Those that keep their wits about them can profit from this inefficiency in pricing by sticking to fundamentals.

Let's take a look at which insurance stocks that could provide investment opportunities this season -- and which to avoid.

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