Texas Flood

Over Memorial day weekend, Texas experienced unprecedented floods snapping trees like twigs, flipping cars, tearing houses apart before washing them away and demolishing patches of highways and underpasses. The Texas Governor Greg Abbott conveyed this flood as "the worst ever." The torrential rains hit Houston the hardest which is consequently the fourth most populated city in America. One of the defining features of Houston is the small rivers that run through the city. Because of 11 inches of rainfall and 40 foot waves, many of the rivers went over it's banks, sweeping away bridges and submerging thousands of vehicles. The NBA's Houston Rockets had a playoff basketball game on May 25th and fans were asked to sleep at the arena due to the severity of the storm.

Though this situation in Texas seems dark and dreary, there is in fact a bright side. Any shrewd investor knows that unprecedented natural disasters lead to market chaos. And when there is chaos in a market, there is usually opportunity for enormous profits.

Lets take a look at a few ways an investor can savvy up and earn a royal return from this week's occurrences in Texas.

1. Insurance Companies.

It is evident that a natural disaster of this magnitude would substantially effect insurance companies that cover areas in Texas. Allstate Corp. is one of the largest providers of flood and home insurance in Texas. It is a common investor sentiment to assume that Allstate will suffer substantial losses and pay out fortunes due to the systematic risk of this unexpected flood. As a result, Allstate's stock price dipped this week because investors blindly feared losses.
But in reality, Allstate is a bargain right now because Allstate will not suffer substantial losses due to the Texas flooding. The flood only hit southeast Texas which is just on concentrated area of the state. In addition, Allstate covers multiple areas around the U.S which lets the company diversify it's risk just in case of a natural disaster.

2. Municipal Bonds.

Investing in Texas county Municipal Bonds is definitely a safe and lucrative bet. Right now, buying Municipal Bonds at a relatively high interest rate in areas such as Hays county where there was a ton of destruction will be profitable because the government will inevitably lower the bond's interest rates in order to encourage and finance the rebuilding of highways and neighborhoods. Holding a Municipal Bond as interest rates fall will drive the bond price up.

3. Construction Companies.

After the flooding, the government and the residents of Texas have one common goal: rebuild. KBR Inc. has ties and special interest in the vitality of the city of Houston because that is where the company is headquartered. KBR Inc. specializes in engineering, construction, Power, and Gas. Because the flood knocked out power lines, caused damage to oil and gas equipment and destroyed homes, there now is a unique opportunity for KBR Inc. to contract new projects in their domain due to the increased demand for heavy construction.

4. Waste Collection

Waste Management Inc. is headquartered in Houston. Because of all the debris left from the flood, there is a steep increase in the demand of waste collection. This time of year is a profitable period for Waste Management because of the pervasiveness of natural disasters that create tons of solid waste all around the country.


Texas Flood. Stevie Ray Vaughan