Thanks to a 'Polar Vortex' of cold air coming down from the
North Pole, temperatures have been near records across much of the
Midwest and Northeast. Here in Chicago, temperatures with the wind
chill approached 50 below zero to start the week, while other
cities in the region saw similarly brutal weather.
It also comes following a burst of heavy snowfall which snarled
much of both the Midwest and the Northeast, kicking of a
particularly unfavorable start to 2014.
While the weather has hampered many in the transportation industry,
and could definitely hit some segments of the food world, not all
stocks look to be negatively impacted by the extreme weather.
Below, we highlight three companies which have buy ranks and may
actually be benefit from increased demand thanks to the wild
Arctic Cat (
ACAT had a great 2013 selling a variety of snowmobiles and ATVs to
the general public, as its stock appreciated by more than 60% on
the year. This Minnesota-based company could also see some solid
trading in 2014 too, especially if demand remains robust for its
key cold-weather focused products in this snowy weather.
Earnings estimates were already moving higher for ACAT before the
storm, suggesting that trends were still moving in the right
direction. In fact, all the estimate revisions for the current
quarter and the current year have been higher, while EPS growth
(yoy) is expected to come in at 72% for next quarter.
ACAT currently has a Zacks Rank #2 (Buy), and its industry is
actually ranked in the top 5% too. So even if ACAT doesn't see a
storm boost, this may be a stock to keep your eye on this winter.
Home Depot (
Home Depot is a massive home improvement retailer, and though it
has a huge base of operations, the company could see a modest
uptick from the weather. That is because demand for a variety of
products that HD sells could spike-be it anything from insulation
and space heaters to shovels and snow blowers-suggesting more good
days could be ahead for this Dow component.
Best of all, the earnings picture was already looking quite good
for HD, as estimates were moving almost universally higher for the
full year time frame. The consensus was also trending higher for
this stock, while earnings misses are pretty rare too.
Thanks to this, HD has a Zacks Rank #2 (Buy), and could see a small
increase for its current quarter earnings too, especially if
extreme weather stays common this winter.
Columbia Sportswear (
Although Columbia makes a variety of outdoor apparel products, its
coats-with special linings designed to keep the heat in-might see
an increase in demand thanks to the extreme cold. The company also
sells a variety of other clothing items and accessories, and if the
weather stays like this for a while, it could boost demand for
COLM's entire lineup of apparel.
Earnings estimates have also been trending higher for this company,
as estimates have risen a little bit for both the current year and
the next year time frames. Analysts seem to be in agreement on the
firm's long term prospects too, as not a single estimate has gone
lower for the current year or next year periods in the past 60
Though COLM is in a rough industry, the stock has secured a Zacks
Rank #2 (Buy). And with the winter weather potentially just getting
started-and the Winter Olympics just around the corner-this may be
another stock to watch for further gains in the months ahead.
Bonus: First Trust ISE-Revere Natural Gas ETF (
When temperatures are plunging into near record levels, many people
had to turn up the heat and leave it running for quite some time.
And when this happens, many utilities have to tap into natural gas
as a fuel to meet this extra demand.
Thanks to this, we might see an uptick in natural gas usage that
far exceeds normal, leading to a modest increase in prices. While
investors can try their luck with the futures market, a play on
natural gas producers might be a lower risk play, such as with FCG.
This ETF holds a basket of companies in the natural gas space,
focusing on firms in the exploration and production segment. Value
metrics, correlation with natural gas prices, and ROE are all used
to rank the stocks, and the top 30 are included in the final
portfolio and then the fund.
FCG currently has a Zacks ETF Rank #2 (Buy), and could be an
interesting pick for investors who are looking for more natural gas
Weather has been pretty extreme across much of the country, and it
has likely led to economic losses in many parts of the nation.
However, some companies and sectors do look to benefit from these
brutal temperatures and heavy snowfall, and could actually come out
Plus, the companies-and the ETF-highlighted above all have Zacks
Ranks of 2 or better. This suggests that they already were looking
quite good before the storms hit, but with the higher demand that
may result from the weather, they may see solid days ahead as well.
Want more insights from Zacks? See our latest free report
5 Stocks to Double
Click here to receive this free report now
ARCTIC CAT INC (ACAT): Free Stock Analysis
COLUMBIA SPORTS (COLM): Free Stock Analysis
FT-ISE R NAT GA (FCG): ETF Research Reports
HOME DEPOT (HD): Free Stock Analysis Report
To read this article on Zacks.com click here.