This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Winners and Losers in Sandy Recovery

Stocks in this article: HD WHR ALL CB TRV

The Losers

Of course, the aftermath of such a major event cannot benefit all sectors of the market. Rebuilding for the sake of rebuilding can never be completely positive: If it was, we could simply destroy developed areas on our own without waiting for the next natural catastrophe. Some of the clearest examples of potential downside can be found in insurance companies with significant exposure to the east coast market.

Given these scenarios, additional downside should be seen in Allstate (ALL - Get Report), which reported first quarter profit declines of 7.4% on higher claims from natural disasters. Last month, Allstate issued a warning for investors, explaining that catastrophe losses would cost the company $359 million. This compares negatively to the $259 million in costs seen last year. Underwriting profits at Allstate's liability unit fell 12% to $458 million for the reporting period, further complicating the company's position in the sector.

Some of the biggest sector negatives have been seen in Chubb (CB - Get Report), which reported fourth quarter profit declines of 77% on higher costs related to hurricane Sandy. More recently, the company reported stronger earnings per share and revenue in the first quarter, with both numbers topping analyst estimates. But the events of last year show some critical vulnerabilities in the company and should give some investors pause in coming quarters.


Similar negatives have been seen in Travelers (TRV - Get Report), which saw Sandy-related losses (pre-tax) of more than $1 billion. The drag in net incomes created declines of more than 50% in the fourth quarter of 2012. First quarter earnings did manage to post a gain of 11% but it is clear that anything short of a catastrophic event would have been viewed as a positive for the weakened company. So, while we have seen something of a turnaround in both Chubb and Travelers, any major rallies in these stocks should be viewed with some level of skepticism.

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,387.21 -291.49 -1.65%
S&P 500 2,029.55 -27.54 -1.34%
NASDAQ 4,681.4970 -90.2660 -1.89%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs