|
Tornadoes leave Street calm
|
 |
May 4, 1999: 10:11 a.m. ET
Despite wide path of destruction, analysts say industry shares shouldn't shift
|
NEW YORK (CNNfn) - The residual damage from a series of deadly tornadoes that twisted through several Midwest towns Monday night should have no sweeping impact on industry stocks involved in the rebuilding effort, analysts said Tuesday.
While business likely will be brisk for insurers, building supply and home-repair retail stores, analysts of such companies said they expect no shifts in the companies' stocks.
(click here for complete storm coverage from CNN.)
"Historically, insurance stocks have responded to disasters on the upside, actually," said Michael Smith, an insurance industry analyst with Bear Stearns in New York. "Catastrophes are generally considered one-time events, so I really don't expect a decrease today."
That is particularly true for larger insurance companies like Allstate Corp. (ALL) which offer a more expansive coverage base and investors who think more long-term.
Even if retail investors, fearing large damage claims, sell early, institutional investors are likely to swoop in and snatch those shares up, knowing such claims are built into long-term rates, analysts said.
Still, others believe there eventually could be a downward shift in insurance stocks if the damages for individual companies reach several hundred million, or even the billion, dollar level.
"It's very difficult to know what companies are going to be hit at this point," said Alain Karaoglan, an analyst with Donaldson Lufkin & Jenrette in New York. "Today there shouldn't be any movement because it's too early. I wouldn't expect much of a reaction unless some company gets hit hard."
On the home-building front, several smaller firms in the area could benefit from a sudden surge in business. But larger suppliers likely won't experience enough of a bump to make a real financial difference.
That goes for popular retailers like Home Depot as well, analysts said.
"Home Depot is a $3 billion company that does business throughout the United States, Canada and now even Latin America," said Daniel R. Wewer Jr., an analyst with Robinson-Humphrey in Atlanta. "When you look at the storm's path, it's so microscopic compared to their overall business, it shouldn't affect its financial statements in any way." 
|
|
|
|
|
|
CNN Interactive
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
