Are You Ready for Sandy's Impact -- On Your Portfolio?

Hurricane Sandy is a market-moving force.

I'm a Floridian and well versed in how quickly hurricane forecasts can change. Sandy is a Category 1 storm right now, but she might lose some of her power before washing ashore. If so, the damages will be much smaller and the impact on all kinds of business also drops. I'm certainly not hoping for a major disaster here. But if it happens, you should know how the storm might affect your retirement savings.

And I'm not just talking about the surge of plywood sales at Home Depot (NYSE: HD  ) and Lowe's (NYSE: LOW  ) , though the home improvement chains will certainly benefit from preparation and repairs.

I'm thinking a bit bigger. This could be the perfect time to invest in heavy construction stocks. Fluor (NYSE: FLR  ) and other major construction specialists will see a surge in contracts if greater New York City takes an 11-foot storm surge, as the National Hurricane Center fears. Vulcan Materials (NYSE: VMC  ) and Cemex (NYSE: CX  ) would be happy to sell huge volumes of basic materials to support these projects. Caterpillar (NYSE: CAT  ) will be there with machinery to get the job done.

$88 billion's worth of residential property sits in the projected storm-surge path of this megatwister, and that's before even considering damage to commercial and public property. The repair bills will be huge.

On the flipside of the same argument, I'd hate to be in the property insurance business right now. Worse yet, the reinsurance companies that buffer the household names of the insurance industry against disastrous losses are staring down the barrel of a gun.

Hurricane Katrina cost this industry some $25 billion when she drowned New Orleans back in 2006. The area in Sandy's sights is more densely populated the The Big Easy, not to mention the Northeastern seaboard's enormous stake in the economy. New Orleans held the headquarters of just 23 publicly traded companies when Katrina hit. For Sandy, there are nearly 1,000 major company headquarters within 100 miles of Asbury Park, NJ (bonus points if you know why I'm focusing on that spot), and that's after limiting the search to market caps of $100 million or more. And again, I'm oversimplifying and leaving out huge chunks of potentially ravaged land, stretching all the way down to North Carolina.

Keep a close eye on Sandy, even if you're nowhere near the eye of the hurricane. This bruiser looks likely to leave a mark on several industries that will take years to wash away.

Caterpillar is the market share leader in an industry in which size matters, and its quality products, extensive service network, and unparalleled brand strength combine to give it solid competitive advantages. Giving this brilliant company another hurricane-powered catalyst almost seems unfair. Read all about Caterpillar's strengths and weaknesses in our brand new report. Just click here to access it now.

Fool contributor Anders Bylund holds no position in any company mentioned. Check out Anders' bio and holdings, or follow him on Twitter and Google+. The Motley Fool owns shares of Fluor. Motley Fool newsletter services have recommended buying shares of The Home Depot. Motley Fool newsletter services have recommended writing covered calls on Lowe's. The Motley Fool has a disclosure policy.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (2) | Recommend This Article (5)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 29, 2012, at 3:30 PM, Darwood11 wrote:

    I'm a long term investor. I don't jump to the tune of these types of events.

  • Report this Comment On October 30, 2012, at 4:48 AM, GETRICHSLOW2 wrote:

    I agree with Darwood11. With a holding period of "forever", one little frankenstorm is no worry.

    Buy and Hold lives..........

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12/26/2014 4:00 PM
CAT $94.23 Up +0.51 +0.54%
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Cemex CAPS Rating: ***
FLR $60.53 Up +0.23 +0.38%
Fluor Corporation CAPS Rating: ****
HD $103.75 Up +0.19 +0.18%
Home Depot CAPS Rating: ****
LOW $67.50 Down -0.01 -0.01%
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