Destruction and Misery creates Opportunity

The horrendous flooding in the MidWest region of the US has displaced tens of thousands of people from their homes and caused the loss of between 1 and 3 million acres of corn production. More breeches in the banks of the Mississippi River are anticipated today and the threat of further destructive flooding in Iowa, Missouri and Illinois is very real.

There are two certain consequences of this natural catastrophe. The already-rising price of corn will continue to rise, and tens of thousands of individuals will now find themselves in need of lumber and other home building related goods. This reality combines with the fact that we’re in the midst of the 2008 hurricane season and Florida, the Carolinas, and other coastal areas could experience property damage.

POTC will buy Home Depot (HD) and Lowes (LOW) in anticipation of increased sales and revenues over the next several months.

Home Depot (HD)
Limit buy $26
Stop sell $24 (8% loss)
Target $33 (27% gain)

Lowes (LOW)
Limit buy $23
Stop sell $21.20 (8% loss)
Target $29 (26% gain)