Nicholas Irion contributed to this article.

In the first and second installments of the quick-trade hurricane portfolio, we discussed which stocks might see increased revenues to help repair storm damage and get life back to normal. Today, I want to key in on names to avoid or short as a result of the ravages of Mother Nature.

And as I mentioned in the first two parts, the types of trades we're looking for in these stocks are short-term pops, or drops, off of news of a storm, not as longer-term fundamentals plays, unless otherwise stated.

The companies with the highest potential for losses have assets sitting in the Gulf of Mexico corridor. These are the companies to avoid as the reason is self-explanatory -- destruction or damage of their assets. For energy companies that are focused on refining, exploration or production, every hour they are offline (i.e. not pumping, drilling, or processing oil and gas), they are losing money.

Using previous storms as a template, here are companies that stand out to me for their potential negative exposure:

Exploration & Production companies: This group has the most potential exposure to damage from rough weather as the cash spigot of oil and gas is turned off. It is a very simple formula -- spigot off, no revenue and bad -- spigot on, gushing revenue and good. Think of the E&P companies as the opposite trade in oil services stocks mentioned in part two of the series.

On the big-cap front, watch Conoco Phillips ( COP), Devon Energy ( DVN), EOG Resources ( EOG) and Murphy Oil ( MUR).

Some smaller under-the-radar names to track are Range Resources ( RRC), Stone Energy ( SGY) and Rosetta Resources ( ROSE).

Refiners: Valero ( VLO) has the highest refiner asset exposure to storm damage. The company operates refineries in Aruba, Louisiana and Texas, and its two plants in Corpus Christi, Texas are located on the Gulf, as well as its largest production center with over 340,000 barrels per day.

Hess ( HES) is an integrated energy company, but has some exposure -- it operates one large refinery in the Caribbean, 550 miles off the coast of Venezuela. Also, integrated names Marathon Oil ( MRO) and Chevron ( CVX) have refinery exposure.

Railroads: Flooding is never good for railroads, as damaged tracks are costly to repair and delays revenue generating loads from being delivered. The recent flooding in the Midwest is a good example of the downside. Both Burlington Northern ( BNI) and Union Pacific ( UNP) both reported that severe weather caused its network to experience outages and disruptions to operations. UNP was forced to close six rail lines for several days and was unable to re-route cargo. The company estimates that earnings will be reduced by $0.05 because of the poor weather.

Truckers: Continuing on the transportation angle, I think the truckers can be a quick trade as a group to the downside. The group has already been hammered by high fuel prices, so the aftermath of a storm will only add to their troubles. Look for weakness in Con-Way ( CNW), YRC Worldwide ( YRCW), JB Hunt ( JBHT), Landstar ( LSTR) and C.H. Robinson ( CHRW).

Caribbean-based assets: Look for companies with factories or plants based in the tropical islands. For example, Consolidated Water ( CWCO) is a Grand Cayman based water company that processes and supplies water to public utilities and commercial properties such as hotels. It has holdings in the Cayman Islands, Belize and the Bahamas. A strong storm could potentially damage their plants and distribution system.

Gaming/Casino: In post-Hurricane Katrina trading, gaming stocks were hit hard and dropped to historically low valuations. Investors speculated that gaming companies with properties in the Southeast and Midwest would have costly rebuilds and revenue shortfalls. The stocks with exposure to the hurricane corridor are Boyd Gaming ( BYD), MGM Mirage ( MGM), Churchill Downs ( CHDN), Ameristar Casino ( ASCA), and Penn National Gaming ( PENN). Of note, the whole gaming sector has sold off hard in the past few months given the current economic turmoil, so the downside is somewhat muted. I would not short this group, but I would avoid it.

Finally, one "not obvious" stock to avoid or short is Northrop Grumann ( NOC). The large defense company has significant Gulf Coast exposure from its shipbuilding operations. Hurricane Katrina wreaked havoc with over $1 billion in damages to shipyards with losses severely reducing near-term margins.

Again, let me emphasize that this portfolio is for a trade and the furthest from a long-term investment I can think of. But a dollar earned from a fast trade or a dollar earned over a 10-year investment is still a dollar earned.

Patrick Schultz is a research associate at TheStreet.com. He has previously obtained securities licenses under the NASD's Series 7, Series 24, Series 52 and Series 63 exams and has worked in the financial markets on various trading desks in addition to trading for his own account. Schultz holds a bachelor's degree in applied economics from Cornell University.

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