Scott Kessler: S&P remains positive on the data processing and outsourced services sub-industry. SunGard Data Systems (SDS
; S&P rank 3 STARS, hold) may be the company in our Data Processing & Outsourced Services coverage group generally perceived as poised to benefit most from the North American blackout, because of its focus on availability services (41% of first-quarter revenues). However, we expect potential new and expanded contracts to be largely offset by costs from servicing existing relationships. We think recent events may cause private and public entities to reconsider outsourcing strategies, and view Affiliated Computer (ACS
; 5 STARS, buy) and First Data (FDC
; 4 STARS, accumulate) as positioned to benefit.
Catherine Seifert: S&P reiterates its positive stance on select insurance stocks. We anticipate blackout-related claims could total hundreds of millions of dollars, mostly tied to business interruption coverage. There may also be some property claims from the fires and incidents of looting that arose. Still, we think the industry remains well equipped to handle these claims, and our investment thesis of favorable premium growth and margin expansion (despite these claims) remains intact. Our favorite insurance stocks include: American International Group (AIG
; 4 STARS), Allstate (ALL
; 5 STARS), Chubb (CB
; 4 STARS), Hartford Financial (HIG
; 5 STARS), and Travelers Property & Casualty (TAP.B
; 4 STARS).
Dennis Milton: S&P views power outage as having minimal impact on restaurant stocks. The power outage affecting the northeastern U.S. and Canada has caused many restaurant locations to shut down for the day. Units in impacted areas that remain open may have difficulty with employee absenteeism and customer traffic flow, due to business closings and mass transit issues. However, food supply concerns seem to have abated. Chains with large concentrations in impacted areas, like Wendy's (WEN
; 4 STARS), which owns the Tim Horton's chain with strong presence in Ontario, may see a minimal impact to quarterly earnings, but we do not expect any long-term ramifications.
Thomas Graves, CFA: After the power outage, S&P is keeping mixed opinions on gaming stocks. The power outage in the northeastern U.S. has not affected our opinion on gaming stocks. Casinos in Atlantic City were able to operate during blackouts elsewhere. Transportation disruptions likely kept some people at Atlantic City casinos longer than expected, but may also have affected people's ability to reach that city. Meanwhile, Atlantic City's July gaming revenues were somewhat disappointing. With the new Borgata casino open for most of July, Atlantic City winnings rose 4.4%, but total winnings at older casinos were down 6.8%. Our favorite gaming stocks include Harrah's (HET
; 5 STARS) and Mandalay Resort (MBG
; 4 STARS).