Trading Hurricane Isaac

With Hurricane Isaac barreling down on the Gulf Coast, it's bound to have an effect on the multitude of industries in the area. So what does this mean for the markets? At 12:15pm on Tuesday, the National Hurricane Center officially upgraded Isaac to a category one hurricane from a tropical storm, thus increasing the probability of disruption to industries in Gulf Coast area. Leading up to the storm, the price of crude oil

traded lower following rolling announcements by offshore rigs and seaside refineries that they will be evacuating non-essential personnel in preparation for Isaac. (Crude oil rebounded slightly Tuesday afternoon, edging up just over 0.50%.) CNBC reported that 80 percent of the Gulf's refining capability was offline due to the hurricane, which could serve to drive the price of gasoline up while driving the price of crude oil lower. Valero

has seen its shares rally leading up to the storm, increasing almost 6 percent in the last five days. With Gulf Coast refineries offline during and immediately after the storm, Valero's San Antonio based refineries are in a unique position to cash in on unfulfilled demand. Should the storm leave the Gulf Coast disabled for longer than expected, Valero could continue to trade higher. The price of natural gas

has actually fallen in the wake of the announcement that Isaac is a full blown hurricane. In the case of a powerful storm, traders can look at a number of companies. An investor can look to the hardware sector for some expected growth. With the damage that comes with hurricanes, residents, businesses and governments alike will need to make repairs. Therefore hardware providers such as Lowe's

and Home Depot

could be a good bet. Powerful storms tend to rock infrastructure such as power lines, meaning no working refrigerators, and thus food tends to spoil. In order to prepare for a storm, and to react to the aftermath, people in the area might stock up on canned foods that will not spoil. This makes Campbell's Soup

an attractive option with its variety of canned foods and widely recognized brand name. Shares of Campbell were trading up Tuesday roughly 0.5 percent. Stocks to avoid in the case of a hard hitting Isaac could include those insurance companies that aren't under the umbrella of protection from larger financial companies and carry flood insurance in their portfolios such as Allstate

and The Hartford

. Another sector that tends to get hit hard by tropical storms and hurricanes is the fishing industry. Fishing ETFs

and restaurant companies with heavy holdings in seafood such as Darden Restaurants

could take a hit if Isaac proves destructive. Should Isaac turn out to be little more than an overhyped thunderstorm, investors can expect refineries to fire up production again within a day or two, and companies like Valero may lose the value they gained this week.