After Hurricane Katrina and Rita severely damaged the Gulf region, the work began as residents attempted to rebuild their homes and lives. But before they could begin the rebuilding process, the area had to go through an intense cleanup. All types of hazardous waste that included everything from oil to medical waste had to be disposed of properly to help eliminate the potential of health issues. And of course there was the standing water that caused even more cleanup issues and brought into play the mold factor, which can be very dangerous.

Hazardous and Medical Waste
Clean Harbors
Clean Harbors is one of the leading providers of environmental and hazardous waste management, and it was also one of the first companies called in 2005 after Katrina and Rita and is probably on speed dial again this year. After the storms ripped through the Gulf region, CLHB was responsible for helping the cleanup efforts in the wetlands. The company used everything from marsh draglines to airboats to collect the debris.

The items that were found in the wetlands ranged from a 20,000-gallon oil tank to household hazardous waste. Clean Harbors' efforts were rewarded in 2005 as more than $15 million in revenue was generated from the cleanup efforts over the third and fourth quarters. Since Hurricane Katrina hit, the stock is up more than 225% and is not the value it once was, but it is a major hurricane cleanup play.

Stericycle (Nasdaq:SRCL)
Not all cleanup involves oil and debris. A potentially very dangerous issue is medical waste from hospitals and medical centers. After the 2005 hurricanes devastated New Orleans, Stericycle was called upon to help in the cleanup efforts of the medical waste from the destroyed hospitals in the region. Similar to Clean Harbors, Stericycle has had a great run since Hurricane Katrina hit, gaining more than 100%. Because medical waste can be so hazardous, I would imagine Stericycle would be ready in the event another strong hurricane makes landfall.

The Shaw Group (NYSE:SGR)
This company is likely more well-known for its engineering and construction business than its environmental division. I have liked the company for its ties to the power industry and construction of nuclear facilities, but it was also a major player in the cleanup efforts after the 2005 hurricanes. The Shaw Group will do everything from keeping the water contaminant free to restoring the land so it is usable again. When it released first quarter statements in January 2006, the company reported net profit that tripled. This was due in large part to the hundreds of millions of dollars the company received for cleanup and restoration after the hurricanes. The stock has been struggling lately, but is still up nearly 200% since Katrina hit.

Garbage Haulers
Waste Management
There was plenty of hazardous waste scattered after a hurricane, but how about the normal everyday garbage? That is where Waste Management comes into play. The largest waste management firm in the U.S. was a major player in previous hurricane cleanup efforts and will be again in the future. The revenue generated from the cleanup will not have as big an impact on the bottom line as the other stocks, but it could give the stock a boost. (For information on how you can reduce your environmental footprint, read Less Trash For More Cash.)

Market Vectors Environmental Services ETF (AMEX:EVX)
If you like all of the stocks mentioned above you can save yourself some money through lower commissions by buying EVX. All four of the stocks above are included in this exchange traded fund (ETF) along with 20 other stocks. The one problem with the ETF is that you will get exposure to stocks that will not benefit from a hurricane cleanup. (If you want more information about EVX and its components check out Great Returns From Garbage Stocks.)

Hedging not Hoping
I'm certainly not sitting at my desk hoping for a hurricane to make landfall so the cleanup companies can swoop in. The reason for this article is to educate investors on how they can hedge their portfolio against the possibility of a major hurricane.

To learn how to bet against natural disasters, read Event-Linked Bonds: Competing Against A Catastrophe.

Related Articles
  1. Chart Advisor

    Now Could Be The Time To Buy IPOs

    There has been lots of hype around the IPO market lately. We'll take a look at whether now is the time to buy.
  2. Stock Analysis

    Allstate: How Being Boring Earns it Billions (ALL)

    A summary of what Allstate Insurance sells and whom it sells it to including recent mergers and acquisitions that have helped boost its bottom line.
  3. Chart Advisor

    Copper Continues Its Descent

    Copper prices have been under pressure lately and based on these charts it doesn't seem that it will reverse any time soon.
  4. Options & Futures

    Cyclical Versus Non-Cyclical Stocks

    Investing during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
  5. Mutual Funds & ETFs

    Buying Vanguard Mutual Funds Vs. ETFs

    Learn about the differences between Vanguard's mutual fund and ETF products, and discover which may be more appropriate for investors.
  6. Mutual Funds & ETFs

    ETFs Vs. Mutual Funds: Choosing For Your Retirement

    Learn about the difference between using mutual funds versus ETFs for retirement, including which investment strategies and goals are best served by each.
  7. Mutual Funds & ETFs

    How to Reinvest Dividends from ETFs

    Learn about reinvesting ETF dividends, including the benefits and drawbacks of dividend reinvestment plans (DRIPs) and manual reinvestment.
  8. Investing Basics

    How to Deduct Your Stock Losses

    Held onto a stock for too long? Selling at a loss is never ideal, but it is possible to minimize the damage. Here's how.
  9. Mutual Funds & ETFs

    Best 3 Vanguard Funds that Track the Top 500 Companies

    Discover the three Vanguard funds tracking the S&P 500 Index, and learn about the characteristics and historical statistics of these funds.
  10. Forex Fundamentals

    How to Buy Chinese Yuan

    Discover the different options that are available to investors who want to obtain exposure to the Chinese yuan, including ETFs and ETNs.
  1. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  2. Do ETFs pay capital gains?

    Exchange-traded funds (ETFs) can generate capital gains that are transferred to shareholders, typically once a year, triggering ... Read Full Answer >>
  3. How do real estate hedge funds work?

    A hedge fund is a type of investment vehicle and business structure that aggregates capital from multiple investors and invests ... Read Full Answer >>
  4. Are Vanguard ETFs commission-free?

    While some Vanguard exchange-traded funds (ETFs) are available commission-free from third-party brokers, a large portion ... Read Full Answer >>
  5. Do Vanguard ETFs require a minimum investment?

    Vanguard completely waives any U.S. dollar minimum amounts to buy its exchange-traded funds (ETFs), and the minimum ETF investment ... Read Full Answer >>
  6. Can mutual fund expense ratios be negative?

    Mutual fund expense ratios cannot be negative. An expense ratio is the sum total of all fees charged by an asset management ... Read Full Answer >>

You May Also Like

Trading Center