Ever since the novel coronavirus touched down on our side of the hemisphere, the negative events that have unfolded have been nothing short of relentless. And just as it appears that we’ve gotten a hold of the pandemic, another situation looms over the horizon: a winter that experts predict could be incredibly cold. However, while we can’t do anything about Mother Nature, we can certainly consider bundling up with cold weather stocks.
According to The Old Farmer’s Almanac, weather forecasters have warned readers to prepare for a “Season of Shivers.” Per its website, this “winter will be punctuated by positively bone-chilling, below-average temperatures across most of the United States.” Janice Stillman, editor of Almanac, states that this winter could be the “longest and coldest” we’ve seen in years — cynically bolstering the case for cold weather stocks.
Interestingly, the National Oceanic and Atmospheric Administration (NOAA) stated in October that La Niña conditions had already developed, indicating that this particular climate pattern will be in place from December to February. One of the forecasted dynamics is that portions of the northern U.S. may encounter “wetter-than-average conditions.” This too sets up the possibility that cold weather stocks will encounter greater-than-usual demand.
Furthermore, it’s not just in the U.S. where people are worried about a deep freeze. Across the Atlantic, weather forecasters are warning the British that about heavy snowfall to last six weeks as the winter cold hits early. Honestly, with so many terrible events and tragedies occurring concurrently with the pandemic, it wouldn’t be a surprise if harsh conditions affect many other countries — thus reinforcing the importance of cold weather stocks.
As well, we should remind ourselves about what happened the last time a cold snap hit us in early 2021. And despite our advanced society, the changing climate demonstrated how vulnerable we are to outside conditions. Again, while there’s not much directly we can do, at least you can insulate your portfolio with these cold weather stocks.
- Kinder Morgan (NYSE:KMI)
- Lennox (NYSE:LII)
- Home Depot (NYSE:HD)
- VF Corp (NYSE:VFC)
- Vail Resorts (NYSE:MTN)
- Polaris (NYSE:PII)
- Gazprom (OTCMKTS:OGZPY)
While this topic generates images of energy firms, that’s only part of the story. With this list of cold weather stocks, I’ve kept the offerings diverse so you can decide which opportunity works best for you. And with all of that in mind, let’s dive in and take a closer look at each one.
Cold Weather Stocks to Buy: Kinder Morgan (KMI)
One of the largest energy infrastructure companies in North America, Kinder Morgan primarily owns and operates oil and gas pipelines and terminals. Transporting a variety of energy commodities through its piping networks, including natural gas, ethanol, biodiesel, refined petroleum and more, Kinder Morgan is an indelible component of our broader economy.
However, with a forecasted dark winter coming, KMI stock could benefit from a much higher magnitude of relevance. Obviously, falling temperatures associate themselves with an inverse correlation with revenue growth for energy-related companies. As well, households have no choice but to pay up. Adding to the cynical circumstance, prices for everything have soared, which favors Kinder Morgan.
In the first three quarters of this year, the company has posted revenue of $12.2 billion, which is already up 4% from the whole of 2020 sales. Furthermore, net income over the same period is at $1.15 billion, a tally that’s significantly higher than the $119 million of net income earned all of last year.
True, nobody knows for sure what conditions will be like until we get there. However, if you believe in the forecasts, KMI is one of the cold weather stocks to consider.
As one of the leaders in the HVAC (heating, ventilation, air conditioning) industry, Lennox has been a double beneficiary — cynically speaking of course — of climate change. Last year, a searing heat wave facilitated a booming recovery in LII stock after it struggled throughout much of the spring season.
Now, Lennox can enjoy benefits from the other end of the thermometer as one of the cold weather stocks to buy. Through its range of relevant products like furnaces and heat pumps, consumers have ample choices to stay warm this winter. As well, you’ve got to figure that those who live in cold-weather areas have listened to ample news coverage about incoming conditions.
If we’ve learned anything from the new normal, it’s that you should plan ahead. Otherwise, you might suffer the consequences of no inventory.
Another point to consider is that according to Bloomberg, many Americans have stashed away their savings to the tune of $2.7 trillion. Thus, consumers have money to spend — particularly on important items like heating systems.
Cold Weather Stocks to Buy: Home Depot (HD)
I’ve mentioned this before in prior articles on InvestorPlace that Home Depot stands out as an exemplary example of a company that takes the extra step for its customers. When the Covid-19 crisis initially shut down commercial activity, Home Depot not only stayed open, but did so at hours later than most other essential services. In turn, they provided crucial availability and a sense of normalcy during an extraordinary period.
I won’t be quick to forget that and I’m sure many customers feel the same way. Now, with a dreadfully brutal winter season allegedly approaching, HD stock is now on the radar again, this time as one of the cold weather stocks to buy.
As I stated, the beauty of the underlying business is its availability. Even in the worst of conditions, Home Depot stays open, providing necessary services to its communities. Furthermore, with local news in winter-affected areas warning viewers to prepare, it’s reasonable to expect that demand related to cold mitigation will help drive sales in the fourth quarter.
VF Corp (VFC)
While most of the top-tier cold weather stocks will focus on energy and related infrastructure, we can’t forget that individuals need to bundle up. As a longtime Californian, I’m not accustomed to freezing conditions — or conditions even approaching that level of misery. But occasionally, I find myself in some pretty chilly places. And when I do, I prefer to purchase products from VF Corp.
Formerly known as Vanity Fair Mills until 1969, VF Corp is a global apparel and footwear company headquartered in Denver, Colorado. The company features 12 brands, among them winter essentials such as JanSport, Timberland and North Face. Naturally, if winter conditions are as bad as experts predict, VFC could be one of the best cold weather stocks to buy.
As is the case with the other companies on this list, the circumstances of the Covid-19 pandemic may help. And with many people holding onto government stimulus checks and other forms of financial support, there’s plenty of money to go around — especially for relatively low-cost items like apparel.
Cold Weather Stocks to Buy: Vail Resorts (MTN)
Not everything about cold weather stocks has to involve mitigation from the coming winter storm. If you’re the type to turn lemons into lemonade, you should consider including Vail Resorts to your portfolio.
To be fair, the inclusion of MTN on this list is an awkward one. Earlier this year, the Wall Street Journal noted that the impact of climate change may mean “ski resorts will have shrinking windows of cold weather to produce artificial snow.” However, with weather experts predicting an unusually chilly winter season, it’s possible that Vail could have one of its best months coming up.
Another factor to consider is retail revenge. Essentially, the pandemic caused a lost year for consumers, who are now out to spend to make up for that time wasted. That’s why you saw huge increases in spending and activity participation for something as simple as Halloween.
Therefore, when it comes to more significant activities like deferred vacations, you can bet that spending will be out in full force.
When you look at coverage of the forecasted dark winter, the tone is usually dark, which is understandable. After all, we’re not too far removed from the cold snap that devastated Texas, which suffered economic damages and even worse, tragic losses of life. As well, we’re still dealing with the pandemic, which may rear its ugly head again.
However, it’s also fair to point out that millions of Americans have grown tired of the negativity. The rise of Polaris, a manufacturer of outdoor recreational vehicles, is evidence of this sentiment shift. Furthermore, should the winter season be much more robust than usual, that would only serve to increase demand for the company’s snowmobiles.
Interestingly, Polaris’ “North American retail sales fell 24% over the summer months as the Medina-based recreational vehicle manufacturer could not keep up with demand because of the supply chain disruption.”
Certainly, the supply chain crisis is a huge issue for Polaris in the interim. However, it’s a long-term catalyst as it confirms the company’s relevance. Therefore, I’d keep a close eye on PII as one of the cold weather stocks to buy.
Cold Weather Stocks to Buy: Gazprom (OGZPY)
Saving the controversial name for last, you might not want to acquire Gazprom depending on your personal and political convictions. To be sure, OGZPY stock has been wildly successful, generating a year-to-date (YTD) return of 65% and has nearly doubled over the trailing-year period. At the same time, you’d be assisting one of America’s adversarial corporations.
Still, if you have a Lord of War attitude regarding your portfolio, it’s hard to overlook Gazprom as one of the more compelling cold weather stocks. As the largest supplier of natural gas to Europe and Turkey, the company is in the driver’s seat every time the winter season starts.
Naturally, this circumstance has made for some serious geopolitical tensions. Sure enough, Europe accused Moscow of holding back supplies as part of gamesmanship tactics. Recently, though, a Bloomberg article indicated that Gazprom will start supplying gas to its European neighbors later this month.
Something tells me that this won’t be the last we hear about this scuffle. And even if it is, there’s always next year.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.