The onshore plays factor in demand (or lack of) from the U.S. consumer, such as the residential housing market which we all know is in a world of hurt. The stocks to avoid consist of situations where the damage will lower their near-term earnings power. As a quick aside, let me emphasize that most of the plays mentioned in this series are trades for a quick pop, and not part of a long-term portfolio under the destructive-weather thesis. Just as the hurricane damage is often short-term, the pops in these stocks are often short-lived as well. Usually, the action will last for a week or two. At most, the stocks will see a quick burst to results for the next quarter as their products and services are in obvious high demand.
Pike Electric ( PEC) and Quanta Services ( PWR): These are my top picks in the onshore segment. Both companies provide infrastructure contracting services to the electric power, gas, telecommunications and cable television industries. After a big storm or flood, these companies are the emergency response team that will be the first on-site to repair down power lines and broken pipes. These are the guys that get the phones working and the lights back on. Vulcan Materials ( VMC): Produces construction aggregates such as crushed stone, sand and gravel used in nearly all forms of construction. VMC acquired their competitor Florida Rock in February 2007, giving it strong exposure to the Southeast market. Fleetwood Enterprises ( FLE), Cavco Industries ( CVCO) and Champion Enterprises ( CHB): These mobile-home makers did well in previous post-hurricane trading. But trade with caution, as these are small-cap stocks with low floats and have wild volatility.