In Sandy's Aftermath, Will There Be Investment Opportunities From Rebuilding And Gas Shortage?

Monday, November 05, 2012 07:24
In Sandy's Aftermath, Will There Be Investment Opportunities From Rebuilding And Gas Shortage?

Tags: disaster recovery | investing | stocks

The long-term effect of Hurricane Sandy and the investment opportunities that may result have commanded the attention of Wall Street in true disaster recovery style.

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Facing $25 billion in damage that has affected 60 million people, the economy could also be facing a stimulus effect from the rebuilding that will need to occur.
Some analysts feel it will, instead, be a zero sum game because the money that will go into re-construction is likely money that would have gone for a vacation. They also say that storm-related spending from federal and local governments is just tax dollars that come from other citizens.
If the home building industry benefits from the additional construction, it would likely show up first in broader market exchange-traded funds (ETFs). The broader energy sector may also be affected by rising oil prices based on supply constraints resulting from damaged refineries.
With everyone trying to game the system and place bets on what will benefit from the aftermath, investing can be tricky.
For example, shares of companies that make portable generators for both residential and commercial use. One company’s shares jumped 20% when the market reopened on Wednesday and held steady on Thursday.
Another company that provides contracting services to the electric utility industry saw its shares jump 10% at the open on Wednesday.
The storm adds complexities to calculations that will have to be made over the next few months by the financial planning community at large because the storm muddies the big picture.
But demand for construction and labor will likely boost local economies for the next six months, possibly for a year.
Whether that boost will spread to the rest of the economy may be doubtful but it could add strength to an already rebounding sector and that could buy the economy a bit of time to build investor confidence.

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