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Gulf Oil Spill: Four Investments

NEW YORK ( TheStreet) -- The massive crude oil spill in the Gulf of Mexico has turned into a nightmare for petroleum giant BP (BP) and is an environmental catastrophe.

But it should boost business for companies in the water treatment and environmental services sectors.

Here are four investments that should benefit from the efforts to clean up the Gulf oil spill.

Oil spill recovery specialist Clean Harbors (CLH - Get Report) is one company that has seen its shares surge on the spill. The Norwell, Mass.-based environmental services firm works closely with government agencies and is expected to see a long-term revenue boost courtesy of the massive oil spill. CLH was up 5.6% Monday and closed at $66.98.

Water treatment company Nalco Holding Co (NLC) is another company that should benefit from the cleanup efforts. The company's stock is posting double-digit intraday gains and is flirting with a 52-week high. The Illinois-based company provides dispersants, which break up the crude. Shares closed at $26.19 on Monday, up 5.9%.

Making Every Plug Talk (Forbes)

A third play on this catastrophe is oilfield-services company Baker Hughes (BHI - Get Report). The Houston firm aids in recovery efforts and gained 1.9% yesterday, closing at $50.72.

Lastly, one can gain diversified exposure to companies in these industries through the Market Vectors Environmental Services ETF (EVX), which holds 21 different environmental services companies, including Clean Harbors and Nalco Holding. EVX gained 2.2% yesterday, closing at $46.92.

With nearly 200,000 barrels of crude oil leaking into the Gulf daily, BP Plc is trying to install a shutoff valve on one of three underwater leaks, but this is a complicated operation that may not succeed, further boosting demand for the services of water treatment and environmental companies.

When investing in these companies, it is important to consider the inherent risks that are involved. A good way to protect against these risks is through the implementation of an exit strategy that identifies price points at which an upward trend could come to an end.
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