Before getting to individual stocks, however, it's probably worth pointing out the obvious fact that oil markets are likely to be the most affected by hurricane-related events. However, I'm not sure you want to be loading up on oil stocks just because of a seasonal event, which is why I am not mentioning any oil stocks here. Now on to some of the other ideas.
First up is Home Solutions of America (HOM). This company is a provider of recovery, restoration, and rebuilding/remodeling services to residential and commercial areas. Home Solutions is a hot stock, up over 650% in the last year. For a good analysis of HOM, check out the Golden Mean Stock Report, a blog that covers many of the markets more popular story stocks, in a fundamental, well-written fashion. You can read their report on HOM, by clicking here.
Next up is Montpelier Re Holdings Ltd. (MRH) a global property and casualty reinsurer that was hit hard by the hurricanes last year. The stock is down over 50% in the last year, which makes it interesting to me. Recently, billionaire vulture investor Wilbur Ross, plunked down a $100 million bet on MRH. A excellent analysis of MRH, can be found at BankStocks.com. Click Here for their piece on MRH (Registration may be required).
Finally, I serve up Imperial Sugar (IPSU). Imperial is a domestic sugar refiner whose stock price has been all over the place since the start of the year. Fundamentally, Imperial's earnings have been increasing this year, due primarily to a shortage of domestic sugar refining capacity which has significantly increased the spread between refined and raw sugar (IPSU makes money on the spread).
The culprit? Last year's hurricanes. The company mentions in their latest 10Q on file with the SEC:
In 2005, hurricanes damaged standing sugar cane crops in both Florida and Louisiana and caused a competitor’s cane sugar refinery, which produces over 9% of domestic refined sugar, to close from the end of August until early December 2005, when it commenced limited production. Additionally, the active hurricane season caused significant disruption of rail and truck transportation service during the late summer and fall time periods.
So if 2006 is as tough as 2005, in terms of hurricanes, one can expect refined sugar prices in the US to stay at high levels, and IPSU to report strong earnings thru 2007.
Imperial's stock has taken a big hit recently following news that Lehman Brothers filed to sell their shares in the company. Lehman picked up their large stake in Imperial when the company was in bankruptcy, and have made quite a bundle on the stock since IPSU's emergence. Readers should note that Imperial, due to its sugar connection, is sometimes referenced as an ethanol play. However, this is incorrect. Since the company's main business is in sugar refining in the US market, it is only very indirectly effected by the marginal increase in sugar demand worldwide due to the growing use of ethanol.
Note: As noted above, I do not hold shares in any of the individual companies mentioned in this post. Readers should be sure to do further research on these businesses via SEC filings, if they find them of interest. As always be sure to pay attention to free cash-flow, not earnings.