Hot profits from 3 Snowmageddon stocks
As the Mid-Atlantic battles record-breaking snow, these stocks could bring red-hot returns to savvy investors.
By Jim Woods, InvestorPlace.com
Already, the storms of February 2010 have brought blizzard conditions to the Washington, D.C. metro area, New York City and many other Northeastern cities. In addition to record-breaking snowfall, temperatures in many areas of the country have been way below normal this winter, especially in the Midwest and East Coast.
And according to the 2010 Farmers' Almanac, this winter will likely see many more days with below-normal average temperatures -- not just in the Midwest and East Coast but for about three-quarters of the nation. The fallout from these cold temps is a constriction of outdoor activity, more time indoors, increased use of heaters, and when you have to go outside, the need to bundle up.
Fortunately, this year's cold spell isn't all bad. In fact, a grumpy Old Man Winter could actually bring warmth to investors savvy enough to take advantage of the extreme weather. And with this in mind, here are three cold weather stocks that might just heat up your portfolio.
United States Natural Gas (UNG): Okay, it's not actually a stock; but United States Natural Gas is an ETF designed to replicate the performance, net of expenses, of natural gas. The logic for UNG is simple -- the colder it is outside, the more we need to heat our homes and offices, and most of us do this via natural gas. The increased demand for natural gas should translate into higher natural gas prices. Of course, sometimes this simple logic isn't quite that simple. But I suspect that if we continue having cold weather, as the experts predict, then the supply situation will begin to dwindle as demand becomes stronger. If this dynamic does take shape, it could mean a big surge in natural gas prices.
VF Corp. (VFC): Eventually, you have to venture outside no matter how cold it is. To stay warm, you'll need to bundle up, and what better brand to bundle up with than the North Face? This leading cold-weather gear brand is made by VF Corp. which also makes well-known clothing brands like Wrangler jeans, Vans shoes and JanSport luggage. The stock has been on a tear of late, climbing 33% over the past six months. On February 11, we'll find out how the company performed in the most recent quarter. All indications are for a strong earnings showing, and if that happens, it just could be due to amped-up sales from those seeking the warmth of its North Face brand.
Dick's Sporting Goods (DKS): When you need to buy North Face sportswear, where do you go? One hot retailer that sells both is Dick's Sporting Goods. In November, the company reported better-than-expected third-quarter earnings on rising same-store sales. Dick's attributed the rise in same-store sales to strong performance of both the North Face and Columbia Sportswear brands. The company also said the increased sales for these brands were likely due to fears of a harsh winter. Well, we all know that harsh winter came to fruition, and it's not over yet. As the cold winds continue blowing, look for more shoppers to continue visiting Dick's Sporting Goods for all of their cold-weather gear. And for two more "cold weather stocks," read: "5 Ways to Profit from Snowmageddon."
At the time of this writing, the author did now own shares of UNG, VGC or DKS.
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Serious issues like drought and the deterioration of the developed world spell opportunity for this industry leader.
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