With the National Weather Center now calling the flooding in Texas "unprecedented," the cost to Texans both in lives as well as cleanup is mounting with each passing hour. Emergency evacuations are underway in Houston and one thing is clear – the ongoing flooding with be extremely dangerous and life threatening to residents in the days ahead. With flooding anticipated to reach 50 inches in some locations, it is difficult to even begin to imagine or predict what the total damage from this historic flooding will total.

When the waters recede, however, Texans will need to begin to cope with the cleanup process, and the type of damage that is wrought by massive flooding is some of the most difficult to repair. While rushing floodwaters can destroy buildings entirely, even those that remain intact can suffer extreme flood damage.

Mold and mildew are invasive and prevalent in warm coastal areas and can cause serious health and safety risks to residents. In a 2010 report, FEMA noted that while "[p]eople are anxious to get on with their lives after a flood. if you had flood waters in your home, take the time to clean thoroughly so problems don't arise later that affect your home or your health."

But who will Texans turn to for help with damage from this “historic” and “unprecedented” flooding event? One company that will likely see a spike in calls and business is ServiceMaster (SERV), whose 36 locations in Texas stretch from Abilene to Waco to Houston and everywhere in between. ServiceMaster's Restore division offers comprehensive flood damage restoration and cleaning, disaster restoration, mold remediation, carpet drying, site restoration and debris removal.

We spoke with one of ServiceMaster’s Houston representatives on Sunday, August 27^th, and they indicated that the phone lines were already being inundated with inquiries about flood damage restoration and repair. He confirmed that the Huston branch does repairs on both residential and commercial properties as well as debris removal and mold remediation.

He said that although the phone calls were pouring in - a fact that appeared to be confirmed by the phones we heard constantly ringing in the background throughout our phone call – the company was prepared to help residents and could get a representative out to assess properties within a couple days of the interstates reopening.

Who Is ServiceMaster?

ServiceMaster Global Holdings, Inc. is a Memphis, Tennessee-based firm that provides residential and commercial services throughout the United States. SERV has three segments: Terminix, American Home Shield, and the Franchise Services Group. The Terminix segment offers termite and pest control services, including termite remediation and wildlife exclusion. The American Home Shield segment provides home warranty plans that cover the repair or replacement of household systems and appliances.

The Franchise Services Group segment, which specializes in the type of services needed after extensive flooding, offers disaster restoration, janitorial, residential cleaning, furniture repair, and home inspection services through franchise under the ServiceMaster Restore, ServiceMaster Clean, Merry Maids, Furniture Medic, and AmeriSpec brands.

ServiceMaster has branches throughout the United States, but the company is particularly prolific in the Gulf Coast states such as Louisiana and Texas. In addition to the 36 branches that ServiceMaster currently has in Texas, the company has an additional 15 branches in Louisiana, including New Orleans, Lake Charles and Slidell. ServiceMaster was one of the many companies that participated in the clean-up following Hurricane Katrina. SERV’s experience and efforts during Katrina were preserved on the company’s corporate blog and can be reviewed here.

Conclusion

We explored how shares of ServiceMaster could get a boost following Hurricane Harvey on our blog on Friday in a post titled “SERV Investors Could Clean Up After Harvey.”

Since publication of that post, however, the historic and disastrous nature of the flooding has only gotten worse.

Our continued detailed research on the damage caused by this storm and our conversation with ServiceMaster in Texas have only strengthened our conviction that an investment in ServiceMaster could pay off for investors over the next few months.

Even before Hurricane Harvey made landfall on Friday, Global property information and analytics provider, CoreLogic released data on Aug. 24 showing that 232,721 homes along the Texas coast with a reconstruction cost value (RCV) of approximately $39.6 billion are at potential risk of hurricane-driven storm surge damage from Hurricane Harvey, based on Category 3 predictions.

Harvey made landfall as a Category 4. The damage at this point is impossible to assess, but the numbers will undoubtedly eclipse the Category 3 predictions listed above.

Corpus Christi has 34,802 homes potentially at risk from Harvey and a reconstruction cost value (RCV) of $6,172,039,671, according to CoreLogic. The combined Houston-The Woodlands-Sugarland areas have 118,138 homes at risk for an RCV of $20,820,079,983, and Beaumont-Port Arthur has 75,567 homes potentially at risk and a RCV of $12,081,775,805.

The only thing we can be certain of at this point is that the damage is extremely serious and will continue to grow even more so with each passing hour.

The cost of cleanup is going to be enormous and ServiceMaster will be one of the companies on the front lines performing repairs.

We believe that shares of SERV will get a boost in the weeks ahead as the demand for cleanup and SERV services in Texas and the Gulf Coast continues to amount.

We encourage our readers in Texas to stay safe and for investors to consider buying shares of ServiceMaster in the week ahead.