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CAV > Dow Jones Newswires August 31, 2005 14:31 ET (18:31 GMT) DJ Manufactured Builders Stocks Soar In Wake Of Katrina

By Janet Morrissey Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--Shares of manufactured homebuilding companies soared Wednesday in the wake of hurricane Katrina. Investors began snapping up shares in companies that build manufactured homes after the Federal Emergency Management Agency indicated it would likely use mobile homes to house the hundreds of thousands of people who were left homeless following Katrina's destructive path through Louisiana, Alabama and Mississippi. Shares of Champion Enterprises Inc. (CHB) rose 12.9% to $13.02 while CAValier Homes Inc. (CAV) jumped 18% to $5.78 and Fleetwood Enterprises Inc. (FLE) rose to 10.5% to $10.03. Palm Harbor Homes Inc. (PHHM) stock was up 9.1% to $18.40 while Nobility Homes Inc. (NOBH) was up 8.7% to $27. Shares of CAVco Industries Inc. (CVCO) rose 4.9% to $33.75. Investors "are assuming that we'll be helping in the (aftermath of the) disaster," said Fleetwood spokeswoman Kathy Munson. She said her company is currently preparing to make a bid for the contract that FEMA offers. Although FEMA has not specifically said how much it plans to spend or how many mobile homes it will buy, investors speculate the number will be high. Market experts recall the buying spree FEMA went on following the hurricanes that ripped through Florida last year. One market analyst, who did not wish to be named, said the Florida storms were a windfall to manufactured builders who bid and won contracts to supply the homes to FEMA. He estimates 8% of Fleetwood's total shipments and 33% of CAValier's shipments came from Florida last year. Lark Research analyst Stephen Percoco speculates Hurricane Katrina will likely "benefit" the manufactured builders. "If you remember what happened in Florida following the hurricanes last Fall, there was a surge in orders" when FEMA ordered units to provide temporary housing, he said. Percoco speculates demand will be even larger than it was following the Florida hurricanes. "The number of homes destroyed here throughout the three states is going to exceed the number of homes destroyed in Florida last year," he said. However, it's not known if FEMA may simply transfer many of its surplus Florida mobile homes to Louisiana, Alabama and Mississippi. The manufactured housing industry has been in a slump for several years, racking up big losses as a result of an inventory glut that occurred after the industry expanded too quickly and a flood of homes were repossessed after certain loans made to people with poor credit went into default. The stocks rallied last year on the belief a rebound was close at hand, but began trading off this year as traditional homebuilding stocks began selling off over concerns about rising interest rates, speculative buying and other issues. "They traded in sympathy" with conventional builders even though those issues didn't really affect manufactured builders, said Percoco. He estimates the manufactured builders' stocks sold off 5% to 10% in the past month and speculates this may also have influenced Wednesday's rally. - By Janet Morrissey, Dow Jones