In a Post-Katrina Portfolio...
Katrina is throwing the U.S. economy into a million different directions. I've heard that Katrina may usher the economy into a long recession. I've also heard that it may boost the economy in the same way that wartime boosts our economy. I can see arguments for both sides... Where do you stand?
With normal things, I'm more of a pessimist. But with the economic conditions we're in right now, I don't think that recession would necessarily be the outcome. I thought long and hard about this recently - and I think (and hope) this will cause a boom in the long run. (My next post will address this)
How to weather this storm? Re-buildling materials.
CEMEX (CX) was a recent addition to my parents' portfolio, which I manage. While CEMEX, as well as everyone else, will face rising energy costs in the months to come, I think it'll still fare well in the rebuildling process. Not to mention, it's probably always a good idea to diversify outside of the United States (being an ADR from Mexico). CX also has a respectable dividend yield at 2.40% right now. A combination of demand, bearish-weathering qualities (dividends), and value (P/E is at 11) makes it a buy for me.
Lowe's (LOW) - also a good choice is Home Depot (HD) - I personally chose Lowe's instead of Home Depot because Lowe's has more locations in the south that can provide assistance when necessary. Home Depot is the nation's largest home building store, with more locations, but I think Lowe's is more prevalent in the south (I looked at a map of both their store locations for the U.S. - sometimes investing is also about looking at non-financial things like that). Also, Lowe's stock also just moves more. The 52-week range is 50.26 - 67.01, whereas Home Depot has stayed between 34.56 - 44.30.
Both honestly are good choices, with analysts recommending both very highly (HD has one Strong Sell recommendation though). Both pay out dividends, although Home Depot has a higher yield at 1.0% (Lowe's is at 0.40%). Both are well valued with forward P/E ratios at 15.40 (HD) and 19.30 (LOW).
So really either one is a great choice.
And some that I already owned prior to Katrina,
Walgreens (WAG) - With other examples of flooding throughout the world, the next big bad thing that'll happen from Katrina is widespread disease. Flooding always brings out all the nastiness in the streets and combine that with stale water that just doesn't move, and disease is the outcome. Not to mention, (and this is honestly with no disrespect to New Orleans in general) New Orleans is just not a clean place to begin with. I visited there last summer, and walking up and down the French Quarter, there was trash everywhere! Now, where I come from, businesses have large trash bins out back where they throw all their trash (contained in a bin). In New Orleans, they just throw out bags and leave them on stores' doorsteps and sidewalks. No bin. No containment. I got so sick when I went there because of sanitation issues - I rushed myself to a Walgreens for antibiotics. However, Walgreens has already suffered a large loss having to close 74 stores in the southern region of the country.
Caterpillar (CAT) - Maker of farming and construction equipment, CAT was a buy before Katrina and still is, now. Cities and towns are always expanding. People build more than they tear down. Construction equipment was just the next logical step. And now that New Orleans is literally going to have to be rebuilt, I think CAT's worth buying. It's trading at around $58 today.
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Oh and more importantly, in addition to figuring out how to tweak your portfolio post-Katrina, one should also considering making tax-deductible donations to help the effort. I know I did. Here's a good place to start: Red Cross.
With normal things, I'm more of a pessimist. But with the economic conditions we're in right now, I don't think that recession would necessarily be the outcome. I thought long and hard about this recently - and I think (and hope) this will cause a boom in the long run. (My next post will address this)
How to weather this storm? Re-buildling materials.
CEMEX (CX) was a recent addition to my parents' portfolio, which I manage. While CEMEX, as well as everyone else, will face rising energy costs in the months to come, I think it'll still fare well in the rebuildling process. Not to mention, it's probably always a good idea to diversify outside of the United States (being an ADR from Mexico). CX also has a respectable dividend yield at 2.40% right now. A combination of demand, bearish-weathering qualities (dividends), and value (P/E is at 11) makes it a buy for me.
Lowe's (LOW) - also a good choice is Home Depot (HD) - I personally chose Lowe's instead of Home Depot because Lowe's has more locations in the south that can provide assistance when necessary. Home Depot is the nation's largest home building store, with more locations, but I think Lowe's is more prevalent in the south (I looked at a map of both their store locations for the U.S. - sometimes investing is also about looking at non-financial things like that). Also, Lowe's stock also just moves more. The 52-week range is 50.26 - 67.01, whereas Home Depot has stayed between 34.56 - 44.30.
Both honestly are good choices, with analysts recommending both very highly (HD has one Strong Sell recommendation though). Both pay out dividends, although Home Depot has a higher yield at 1.0% (Lowe's is at 0.40%). Both are well valued with forward P/E ratios at 15.40 (HD) and 19.30 (LOW).
So really either one is a great choice.
And some that I already owned prior to Katrina,
Walgreens (WAG) - With other examples of flooding throughout the world, the next big bad thing that'll happen from Katrina is widespread disease. Flooding always brings out all the nastiness in the streets and combine that with stale water that just doesn't move, and disease is the outcome. Not to mention, (and this is honestly with no disrespect to New Orleans in general) New Orleans is just not a clean place to begin with. I visited there last summer, and walking up and down the French Quarter, there was trash everywhere! Now, where I come from, businesses have large trash bins out back where they throw all their trash (contained in a bin). In New Orleans, they just throw out bags and leave them on stores' doorsteps and sidewalks. No bin. No containment. I got so sick when I went there because of sanitation issues - I rushed myself to a Walgreens for antibiotics. However, Walgreens has already suffered a large loss having to close 74 stores in the southern region of the country.
Caterpillar (CAT) - Maker of farming and construction equipment, CAT was a buy before Katrina and still is, now. Cities and towns are always expanding. People build more than they tear down. Construction equipment was just the next logical step. And now that New Orleans is literally going to have to be rebuilt, I think CAT's worth buying. It's trading at around $58 today.
-
Oh and more importantly, in addition to figuring out how to tweak your portfolio post-Katrina, one should also considering making tax-deductible donations to help the effort. I know I did. Here's a good place to start: Red Cross.
posted by L.Su at 8:41 AM
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