David Evanson and Hardeep Walia

Forbes.com, Fall, 2012

I’d like to think we’ve come a long way since Hurricane Katrina slammed into southeast Louisiana on August 23, 2005. There were hard lessons to be learned, but we learned them well.

This time when Hurricane Sandy came knocking, the Federal Emergency Management Agency (FEMA) was on the spot, ahead of time. The New York Stock Exchange orchestrated an orderly closure and opening (whether they needed to close is another question that needs to be answered). The New Jersey coastline was evacuated days before Hurricane Sandy came ashore. We were spared tragic footage of families adrift, and public facilities hastily and poorly converted into mass shelters of unimaginable squalor. Yes, we are a long way from the “heck of a job” that then FEMA director “Brownie” did, and this was apparent in Sandy-related fatalities that were a fraction of Katrina’s 1,833 victims.

But still our hearts go out to the many victims, who thankfully have their lives, but not much else. And now the long and arduous work of rebuilding must begin, which on a happier note, is something which Americans take to naturally. We’ve always been a dust-off-your-trousers kind of nation.

It took years to rebuild after Katrina. How long will it take for us to fully recover from Sandy? Motif Investing has put together a motif index to track rebuilding efforts along the path of the storm called Rebuilding After Sandy. This motif index consists of building supply firms, self-storage centers, roofing supply businesses and manufacturers of utility supplies and generation equipment.

The motif includes companies like Lumber Liquidators (LL), North America’s largest flooring retailer, with 285 locations. Many of these outlets are clustered around Sandy’s footprint, which is where they will be needed.

The motif also includes Eaton Corporation (ETN), a diversified manufacturer of power supply components and systems that are used by utilities and in other markets.

Of course, there are several reasons behind the success of these companies. But in a slow to no growth economy, the tragedy of Hurricane Sandy, regrettably, offers an unmistakable opportunity and tailwind to a select group of companies. For example, Home Depot (HD) positioned hundreds of trailer trucks laden with supplies along the storm’s path, while Wal-Mart (WMT) sent 7,000 generators, which can run as much as $1,500 a piece to Northeast stores, to be prepared, but also to take advantage of the opportunity.

And speaking of generators, Generac Holdings (GNRC), also in the motif, is one of the largest manufacturers of generators in the U.S. serving residential, commercial, industrial and construction markets.

Thankfully the storm has passed, but unfortunately, the cleanup has just begun. It may be several years before the job is completely finished, and the Rebuilding After Sandy motif, which had a one year return of approximately 43%, offers one measure of how quickly and how well the job is getting done.