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From Water to Coal, US Companies May Earn Big Helping Japan

Wednesday, 30 Mar 2011 03:17 PM

The 9.0 Japanese earthquake and resulting tsunami is a human tragedy on an epic scale. Economically, it’s the worst disaster in history, with the World Bank estimating damage of $122 to $235 billion, figures far outpacing the devastating 1995 Kobe earthquake in Japan and 2005’s Hurricane Katrina in New Orleans.

One thing, however, that can be depended upon is that the resilient Japanese will rebuild. That means a demand for money, manpower and materials. From that standpoint, there are companies in the U.S. that will benefit from the reconstruction efforts.

Construction companies, obviously, could see their business gain steam from the rebuilding efforts. "The task of rebuilding Japan is likely to offer business opportunities to certain firms, including heavy equipment manufacturers," UBS analysts report.

Three stocks analysts cite that investors may want to pay attention to include Wisconsin-based construction and food-service supplier Manitowoc Company (MTW), farming and construction equipment concern Deere & Company (DE), and engine manufacturer Cummins (CMI).

All three will be able to supply the construction industry or help replace existing machinery needed to run the Japanese economy.

Other sectors will see more business helping Japan recover, especially in the more immediate future. Take producers of bottled water. Always a necessity after any disaster, bottled water is seeing demand skyrocket in the wake of the contamination stemming from the quake-stricken Fukushima Dai-Ichi nuclear plant.

Water is expensive to ship due to its weight and doesn't bring in as much revenue as would carbonated sodas or alcoholic beverages, yet the Japanese government is considering importing water to quench the needs of those worried that nuclear radiation could affect existing supply, The New York Times reports.

"As authorities tried to maintain calm in Tokyo, residents were racing to buy as much bottled water as they could, clearing the shelves of the city’s stores," the newspaper reports.

That’s good news for suppliers. "We now expect to see an 8 percent to 10 percent increase in volume for bottled water for the next three to four months and, if this situation continues through the end of the year, volume may go up 10 percent to 12 percent," says Hong Kong-based Philippe Chan, an Asia manager for beverage market researcher Canadean, according to Daily Finance.

Only a handful of companies outside of Japan harbor the capacity to meet the demand for bottled water and other drinks, analysts say. Coca-Cola (KO) may be one of them.

Coca-Cola’s shares are up 5.6 percent since March 16, although the cost of importing water from plants in China and the Philippines may eat into the windfall earnings, analysts say.

"Japan is a small part of Coca-Cola's business. It's not that large a piece to their revenue pie," an analyst at an unidentified Wall Street firm tells Daily Finance.

Drink providers aren't the only ones seeing demand rise. Coal and natural gas producers are going to see more demand for their products as well, which could boost sales for many U.S. producers.

U.S. coal stocks have been up 12 percent since the earthquake and ensuing tsunamis, according to Canadian newspaper The Globe and Mail.

Japan is a major importer of coal, consuming about a quarter of the world’s metallurgical coal, which is used in making steel, and nearly a fifth of its thermal coal, which is used in power generation.

"Thermal coal appears to be the key beneficiary of the nuclear crisis in Japan, as the future of nuclear energy is put to the test," according to Deutsche Bank analysts, the Globe and Mail reports.

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The 9.0 Japanese earthquake and resulting tsunami is a human tragedy on an epic scale. Economically, it s the worst disaster in history, with the World Bank estimating damage of $122 to $235 billion, figures far outpacing the devastating 1995 Kobe earthquake in Japan and...
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2011-17-30
Wednesday, 30 Mar 2011 03:17 PM
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