Take Positions In These Three ETFs After Hurricane Harvey And Irma

I just put out an Insight article on my company's website - Which Companies Are Performing Well Following Harvey and Irma.

In this article, I applied three dimensions of analysis to dissect the stock market and dig out mostly impacted companies. The first dimension of the analysis is to identify sectors with exposure, both positive and negative, to these hurricanes. Positively impacted sectors are mostly in construction, engineering, utilities, landscaping, maintenance/repair/overhauling, waste management products and services, while negatively impacted sectors are likely in insurance, reinsurance, cruise lines, and the tourism business. This initial analysis indicated 91 companies in sectors likely to be positively impacted, and 15 companies negatively affected in the aftermath of the hurricanes.

The second dimension is to find companies in the above-selected sectors located in either Florida or Texas, as these companies are likely to gain greater benefits by being able to offer business locally. For example, Fluor Corporation (FLR) is an engineering and technology company headquartered in Irving, Texas, with major operations in the energy sector. On the negative list, Royal Caribbean Cruises Ltd. (RCL) is headquartered in Miami, Florida, and a significant portion of its business is based in Florida. This dimension identified 20 companies based in Florida or Texas that will benefit from hurricane rebuilding, while two companies will see negative impacts on their businesses.

However, other companies belong to the above-selected sectors that do not reside in those two states but can also be impacted, positively or negatively, if they have existing customers in Texas or Florida. By tapping into supply chain ecosystems of these companies together with their customers’ location information, we can expand the list of target companies. For example, AECOM (ACM), a construction and engineering company, is located in California, but one of its major customers is the State of Texas, so we can assume a bump in business activity in Texas as the state rebuilds. RenaissanceRe Holdings Ltd. (RNR) is not based in Florida or Texas, but one of its customers, Universal Insurance Holdings, Inc., (UVE) has its headquarters in Fort Lauderdale, Florida, so this company should be included on the negative list. This is the third dimension of our analysis - Supply Chain. With this dimension, we add another 20 companies to our positive group (netting out 13 companies that were already on the list from Dimension Two) and 4 to our negative group.

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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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