7 Stocks That Could Surge From LA Wildfires Recovery Efforts

Los Angeles wildfires continue to wreak havoc in the region, taking precious lives and destroying thousands of homes. The LA County Sheriff announced that nearly 10,000 structures were lost in the wildfires, but this number has already gone up and is expected to rise further as the authorities struggle to contain the fires.

Once the dust settles, there will be a huge demand for reconstruction of properties destroyed in the wildfires. The Biden administration has already promised federal reimbursements for the recovery efforts going on. Homebuilders could possibly benefit from this government support and the resulting spending surge as well.

To come up with the list of 7 stocks that could surge from LA wildfire recovery efforts, we considered stocks with a market cap of at least $4 billion.

7. The Allstate Corporation (NYSE:ALL)

ALL stock is down 5% since last Monday. The stock’s valuation continues to impress investors. Some would argue that the recent multiple expansion has priced in a lot of growth, but the re-rating is consistent with the rest of the market. The stock is trading at a forward EPS multiple of 7.7 compared to the S&P’s multiple of 22.

This attractive valuation is also better than that of some of its peers, including Travelers and Progressive Corp. The company recently survived activist investor Nelson Peltz, who gave up and sold 3.04 million shares, a sizable part of his total holding. While this would disappoint those who wanted a shakeup at the firm, investors would appreciate that the company can now get back to focusing on its affairs.

6. Toll Brothers (NYSE:TOL)

Toll Brothers is a luxury home builder in the United States, including Los Angeles, California. It was having an amazing 2024 when in late November the stock started tumbling after poor October home sales numbers. The stock is now available at a 25% discount.

This discount looks even more attractive when one considers the possibility of increasing revenue in 2025. As unfortunate as it is, a lot of luxury homes have been destroyed by the LA wildfires. Once the dust settles, these homes will need to be rebuilt and TOL operates exactly in the luxury homes segment.

But that’s not all. Even without the potential increase in demand in 2025, the company boasts strong enough finances to be considered a good investment. The company has a strong $1.3 billion cash position, no major debt to retire in 2025, and a $1.8 billion revolving credit facility. This is well complemented by over $1 billion in cash flows in 2024, setting the company up for potential land acquisitions to expand its business in 2025.