Does Pestilence Threaten Our Portfolios?

As if you didn't have enough things to worry about, the bedbugs are back.

Once mostly eradicated in the U.S. with the help of DDT, the tenacious pests have been staging a comeback. They spread aggravation and disgust more than disease, but they're still enough to threaten the profits at many companies.

The usual suspects
Their most obvious victim is the lodging industry, since it's easy for unwitting travelers to spread bedbugs. There is plenty of anecdotal evidence that bedbug-related skittishness has spurred potential travelers to reconsider their plans, and stories have begun to surface that will only encourage further alarm. An afflicted opera singer sued Hilton Hotels for $6 million in 2007. Hotels are facing complaints and bad publicity (including listings on online bedbug registry sites), and some have been paying settlements to complaining guests.

Hotels can take steps to keep bedbugs under control, but it's costly -- various estimates put the figure at between $2,500 to $6,000 or more per room whenever an infestation is discovered.

Less usual suspects
Hotels aren't the only businesses facing itchy complications. Abercrombie & Fitch (NYSE: ANF  ) had to close a few of its New York stores for a few days in July due to bedbugs. Although that's no huge deal to a company that overall rakes in some $3 billion in revenue annually, the episode also cost the company another chunk of its waning reputation. An AMC theater in Times Square was closed briefly due to bedbugs, and bedbugs were even found at CNN headquarters, the New York Public Library, and a Nike (NYSE: NKE  ) store, which was then closed for cleaning.

Growing concern about bedbugs can also affect furniture makers, airlines, bus lines, and more. Landlords may face new costs in treating and preventing infestations as well.

Bedbug beneficiaries
With an estimated $258 million being spent last year on bedbugs, according to the National Pest Management Association, pest control companies such as Rollins (NYSE: ROL  ) unit Orkin are the obvious beneficiaries of this problem. Some of the chemicals used to fight bedbugs come from Monsanto (NYSE: MON  ) .

But there are other beneficiaries. Part of the significant cost of treating hotel rooms involves replacing the mattresses. That can deliver an unexpected windfall to mattress companies. Moreover, if the creepy critters increase consumers' desire for cleaning products, the companies that make those products could also see a boost in sales.

At this point, the effect of bedbugs on companies' bottom lines will likely be minimal, but it's still worth keeping an eye on. In the meantime, sleep tight, and don't let -- well, you know.