4 Building Product Stocks In Focus Post-Harvey Havoc
Zacks Investment Research | Aug 31, 2017 04:30AM ET
Hurricane Harvey continues to devastate the Gulf, with many lives lost and thousands rendered homeless. Houston, the fourth largest city in the United States, is flooded receiving more than 50 inches of rain, as per National Weather Service. Goldman Sachs (NYSE:GS) economists estimate $30 billion in property damages due to Harvey, while JPMorgan (NYSE:JPM) ranks Harvey among the top ten costliest storms the country has faced.
Around 30,000-40,000 houses have been hit by the hurricane. Keeping the tragedy aside, such disasters might prove to be a boon for companies in the building materials/ products space, with homeowners trying to repair the damaged homes.
Historically, building product companies like Martin Marietta Materials, Inc. (NYSE:MLM) and Vulcan Materials Company (NYSE:VMC) have been facing the brunt of abnormally wet weather conditions, jeopardizing shipments, production and profits. Also, Harvey will likely cause shipment delays in the short term. Nevertheless, demand for building materials for the repair of damaged properties will more likely offset the initial concerns regarding business delays, boosting the top line for these companies.
Keeping this in mind, stocks of a number of building product companies rallied after Harvey hit the Gulf. Shares of Vulcan surged 7.7%, Martin Marietta jumped 9.3%, while Summit Materials (NYSE:SUM) increased 9.2% since Harvey wreaked havoc on Aug 25. Therefore, adding building product stocks to your portfolios makes great sense at this point.
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