Hurricane Harvey: Rebuilding Stocks

09/06/2017 2:55 am EST


Crista Huff

Editor, Cabot Undervalued Stocks Advisor

Which stocks could benefit in the aftermath of Hurricane Harvey? asks Crista Huff, editor of Cabot Undervalued Stocks Advisor.

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In the areas of homebuilding products, construction and engineering, Boise Cascade (BCC), Quanta Services (PWR) and Weyerhaeuser (WY) — all in our model portfolio — are three excellent choices. Here are some quick notes on a few of their more well-known competitors:

Beacon Roofing (BECN) is a slightly-overvalued growth stock. A surge in 2018 revenue due to hurricane rebuilding could change the earnings outlook and valuation. BECN is worth monitoring in the coming months.

Chicago Bridge & Iron (CBI) is expected to take a big loss in 2017, followed by attractive profits in 2018. It’s a low-priced stock with a low P/E.

The company has been embroiled in lawsuits in recent years, yet the potential boost in post-hurricane revenue combined with the already-rosy 2018 outlook makes CBI a stock worth considering.

CBI doesn’t currently fit my investment criteria, but I will continue to assess its risk-reward scenario in the coming months.

Owens-Corning (OC) is a maker of glass fiber, insulation and roofing materials. OC is a fairly-valued growth & income stock. Any post-hurricane surge in 2018 revenue could boost profits and lead to a capital gain opportunity.

USG Inc. (USG) is a maker of building materials. USG is expected to see profits fall 1.2% in 2017, then rise 23.8% in 2018. The 2018 P/E is only 14.5. Therefore, USG looks fantastic next year, and the growth outlook could definitely increase on post-hurricane rebuilding.

My guess is that the current year’s falling profits will not harm the share price any further. It’s technically too early for me to add USG to the portfolios due to the poor 2017 earnings outlook, but I wouldn’t look askance at investors who jumped on that opportunity.

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