The Rebuilding-Louisiana Portfolio

On Monday, investors focused on higher energy prices and insurance-company payouts in the wake of Hurricane Katrina. But as time marches on, attention will shift to rebuilding, the risks that hedge-fund and pension-fund investors took in buying supposedly low-risk "catastrophe" bonds and the effect of the storm on the fragile U.S. economy.

While the near-term result of natural disasters is naturally negative, they very often lead to infrastructure investments that end up looking like a net positive for their regions. Homes, roads, offices and industrial complexes need to be rebuilt, and the government usually provides tax relief, or outright grants, to pave the way.

Investors will be scouring the horizon this week for companies that will see benefit from the natural disaster. It may seem craven, but this is just capitalism's way of allocating financial resources at a critical time to the companies that need it from the sources that have it. Call it Katrina's invisible hand.

An example might be Beacon Roofing Supply (BECN Quote), which doesn't operate branches in the area but may see its revenue and earnings move up anyway.

A Morgan Keegan analyst notes that the storm's destructive winds have torn a lot of roofs off structures. Shelter Distribution, a major distributor being acquired by Beacon, operates two locations in the greater New Orleans area. The analyst said he believes Katrina could potentially push 2006 income at Beacon up by 20 cents to 25 cents a share.

Not Just Any Port in This Storm

Everyone immediately worries about the loss of life in a city the size of New Orleans, and economic minds immediately dwell on the loss of Gulf of Mexico oil production. But the area is also home to the Port of South Louisiana -- the fifth-largest port in the world and the largest port in the U.S. Yes, it's bigger than New York-New Jersey, bigger than Los Angeles-Long Beach and bigger than Houston. You have to go to Hong Kong, Shanghai, Rotterdam and Singapore to find ports that handle more tonnage.