Heavy equipment makers and rental companies stand to benefit from reconstruction efforts after Irene damaged roads and other infrastructure, took out power to millions of homes and flooded businesses.
U.S. industrial shares were higher in the first trading day after Hurricane Irene passed over the northeastern United States, outperforming the broader stock market.
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"Anytime something needs to get rebuilt, it's good for construction equipment, good for people that rent it, make it, obviously," said Langenberg & Co analyst Brian Langenberg.
He said makers of electrical distribution transformers will be winners as power lines are restored, naming Cooper Industries (NYSE:CBE), SPX Corp (NYSE: SPW) and ABB.
Oshkosh Corp <OSK.N>, Terex Corp <TEX.N> and Manitowoc should do well, he said.
For engineering and construction companies, such as Quanta Services Inc (NYSE:PWR) and Pike Electric (NYSE:PIKE), the boost to demand will depend in large measure on their geographic mix. Some are more exposed to parts of the United States that were not affected by Irene.
National distributors such as Watsco Inc (NYSE:WSO) and W.W. Grainger (NYSE:GWW) will also get a pop, Langenberg said, but he added that Monday's stock gains were driven more by macro-economic factors than reaction to possible storm-related business.
"People are starting to realize we're not actually going to have a global rollover in the economy," Langenberg said, adding that the damage from Irene was not nearly as bad as that from Katrina, which hit the U.S. Gulf Coast in 2005.
For a huge global company like Caterpillar Inc <CAT.N>, any added sales will be small relative to the size of the company. As equipment fleets are used more intensely, the need to replace them with new machines will be incrementally stronger. Such fleets are aging anyway, since the recession made many users reluctant to replace expensive bulldozers and the like.
Analysts at KeyBanc Capital Markets said Generac Holdings Inc (NYSE:GNRC) could benefit from a spike in demand for portable generators. Watsco stands to gain from repair and replacement of heating and cooling systems.
Equipment rental companies and portable storage providers could be winners, according to KeyBanc. These include United Rentals <URI.N>, RSC Holdings (NYSE:RRR) and H&E Equipment Services (NASDAQ:HEES) If more people need temporary storage, as they did after recent Mississippi flooding, Mobile Mini (NASDAQ:MINI) could benefit.
"This was about as widely predicted a storm event as has occurred in some years," said Craig Johnson, president of Customer Growth Partners.
There was a lot of forward buying at Lowe's Cos Inc (NYSE:LOW) and Home Depot Inc (NYSE:HD), as well as Sears Holdings Corp (NASDAQ:SHLD), which sells outdoor power equipment. Johnson described brisk sales of generators, plywood, batteries, buckets, mops, tape and chainsaws before the storm.
Lowe's said Emergency Command Center is fully activated. It has moved more than 1,000 inbound loads to Distribution Centers or directly to stores.
Products in high demand are batteries, flashlights, bottled water, generators, wheel barrows, temporary fencing, ladders and other goods. Lowe's said it adheres to a policy of not raising prices in the event of an extreme natural disaster.
A number of publicly traded storage real estate investment trusts (REITs) could see a temporary benefit, if history is any guide. Extra Space Storage (NYSE:EXR), U-Store-It, Sovran Self Storage (NYSE:SSS) and Public Storage (NYSE:PSA) are prominent names in this area.
About a third of Extra Space Storage properties and customers were located in Irene's path, said spokesman Clint Halverson. While it is too early to gauge demand from Irene, the self-storage operator typically sees an increase in demand after a hurricane from two sources.
The first is from people who move into the area, such as contractors, to help with the cleanup.
"On the other side, we see increased demand from homeowners that have to get their stuff out while they rebuild and reestablish and get things fixed," Halverson said.
Existing tenants also usually end up staying longer, he said. The company on Monday was evaluating both Irene-inflicted damage to its own properties and renter demand changes.