"Prudent" Upgrades

09/09/2005 12:00 am EST


Jessica Chiaverini

Associate Editor, The Prudent Speculator

Jessica Chiaverini is co-manager at The Al Frank Fund and contributing editor to The Prudent Speculator. Following Katrina, she has increased her price targets for several stocks in two sectors that were impacted-oil refiners and manufactured housing.

"With Katrina-impacted shares trading like Internet stocks, a couple of our refining industry recommendations soared right past our target prices, before pulling back in a round of profit-taking. The catalyst was the growing realization that it will be some time before the Gulf Coast refineries that were shut down are able to restart. We have decided to give our refining stocks another round of goal price range upgrades.

"We still like the long-term growth prospects of the refining sector, given that there has not been a new refinery built for several decades in the US, and we have hiked our target prices for ConocoPhillips (COP NYSE) to $90; Holly Corp. (HOC NYSE) to $60; Marathon Oil (MRO NYSE) to $80; Tesoro (TSO NYSE) to $66; and Valero (VLO NYSE) to $114.

"Another sector that has been a big beneficiary of Katrina is manufactured housing. There are one million people homeless and the Federal Emergency Management Agency (FEMA) is putting out a call to the recreational vehicle and manufactured housing industries for help. In fact, one analyst estimated that FEMA used about 13,000 manufactured homes in Florida after the 2004 hurricanes and it is obvious that the aftermath of Katrina will require many more housing resources.

"We have boosted our goal prices for the following five manufactured housing industry stocks: Cavalier Homes (CAV ASE) to $8; Champion Enterprises (CHB NYSE) to $15; Fleetwood Enterprises (FLE NYSE) to $14; Patrick Industries (PATK NASDAQ) to $15, and  Decorator Industries (DII ASE) to $12."

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