Investing in hurricanes and floods is a tricky subject, and in my experience don't usually pan out. But the size of this storm make a couple plays a little more feasible.
Think of companies that provide material for industries that will be needed for the rebuilding effort:
1) Roofing repair and waterproofing. I mentioned Friday that Beacon Roofing Supply and Owens Corning had been mentioned by traders. We have the possibility of very significant damage across a wide area, and relatively constrained capacity that could bring the price for roof repairs up significantly.
(Read more: Hurricane Sandy: Lots of Talk, Not Stock Trading)
2) Utility services. Hubbell manufacturers the hardware that is used on the pole lines maintained by utilities.
3) Rental cars. There may be damage to a lot of cars from downed trees and flooding, which could increase car rentals that would be covered under insurance policies. Hertz is the obvious player.
4) Insurance claim services. Crawford provides claim services to the major insurers. Hurricanes produce a concentrated mass of claims which should benefit them.
5) Generators. Generac Holding makes power generators and recently preannounced very strong results on heavy demand for portable and home standby generators. Last year sales were up significantly in the second half of the year on Hurricane Irene and Midwest floods. In front of storms and floods, the company typically sees an increase in sales of its portable generators, but then later also sees increased sales of its flagship product, the home standby generator.
(Read more: Here's Why Sandy Is Such a Monster Storm)
Quick points about the two "obvious" sectors — retail and insurance:
2) Insurance companies. Significant exposure for Chubb, Travelers, Allstate, AIG and Tower Group . Not surprisingly, these stocks have been under some pressure last week, and likely will be until the size of the losses are known.
But remember, it's not necessarily the size of the losses that is the main issue; it's how much they can raise rates immediately after. Insurance stocks dropped only briefly during Hurricane Katrina in 2005, but quickly recovered. Put differently, the issue is, will the losses be big enough for the insurance companies to aggressively raise rates?
We still don't know. Historically, Category I hurricanes are not major insurance events; however, this is not a typical Category 1 storm.
Two companies to keep an eye on: Caesars's Entertainment, which owns four casinos in Atlantic City, three of them on the boardwalk (Caesar's, Bally's and the Showboat), and Boyd Gaming, which owns half of the Borgata in the Marina section. The Borgata is about 14% of Boyd's EBITDA, according to Merrill Lynch. The casinos in Atlantic City are about 12 percent of Caesar's EBIDTA.
—By CNBC's Bob Pisani; Follow Him on Twitter @BobPisani
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