'RealMoney' Radio Recap: Tread Carefully on Katrina

Be selective when picking oil stocks in the wake of Hurricane Katrina, Aaron Task told

"RealMoney" radio show listeners Thursday.

Task, co-executive editor of

TheStreet.com

and stand-in host for Jim Cramer, cited a Citigroup report on the subject. Task said the report listed

Marathon Oil

(MRO) - Get Report

and

Chevron

(CVX) - Get Report

as suffering the most from the hurricane.

Amerada Hess

(AHC) - Get Report

and

Occidental Petroleum

(OXY) - Get Report

have limited exposure to the Gulf, the report said. Among refiners, the report suggests that

Tesoro

(TSO)

and

Sunoco

(SUN) - Get Report

should benefit from rivals' lost refining capacity there, Task said.

Richard Suttmeier, chief market strategist for Joseph Stevens & Co. and a

RealMoney.com

contributor, joined Task by telephone. Suttmeier said the

Fed

has no choice but to halt interest rate hikes in the wake of hurricane Katrina, and thus the flattening of the yield curve is over. Hedge funds, many of which were betting on a flattening of the yield curve, will now have to unwind their trades to avoid losses.

Task asked Suttmeier, who writes

TheStreet.com Technology Report

, what lies ahead. Suttmeier, who is expecting a "great fourth quarter," said September is historically one of the weakest months for stocks. He is seeing no great reason to add to positions now. He would look to lighten up on any rally.

Suttmeier says he sees a low for the

Nasdaq

of 2050 with a worst-case scenario of 1975. He would be a buyer at 1975, though. Nasdaq traded Thursday at 2148.

A caller wanted to know about the chances of

UbiquiTel

( UPCS) being acquired. Suttmeier said he would be cautious as the stock was overvalued according to his model.

Another caller asked about

Cendant

( CD). Task said Cendant was likely to face some short-term difficulty due to the impact on travel of Hurricane Katrina and higher oil prices.

Suttmeier concurred but said Cendant is trading close to fair value according to his model. Technically, there is a ceiling on the stock in the mid-$20 range, he said, but he would look to buy on weakness. Cendant recently fetched $20.05.

A caller wanted to know about

St. Joe

(JOE) - Get Report

. Suttmeier said the stock was overvalued according to his model, "but not by a lot." Technically, he thinks the stock has peaked, and would be a seller on strength.

Another caller asked about

7-Eleven

(SE) - Get Report

, which received a buyout offer. Suttmeier said 7-Eleven's stock is very overvalued and is purely a momentum play.

Another caller asked about

Actuate

( ACTU), a stock Suttmeier recently wrote about in his newsletter. Suttmeier said Actuate is 64% undervalued, and he has a target price of $3 on the stock. Actuate traded Thursday at $2.34.

Finally, a caller asked if

Allied Waste Industries

( AW) and

Waste Management

( WMI) might be good post-hurricane clean-up plays. Task said yes and added that the two companies were also listed among the stocks in the Citigroup report as expected to benefit from the hurricane.

Aaron L. Task is the co-executive editor of TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send your feedback to

atask@thestreet.com.