In case you have been living in a cave or on a beach in the French Riviera and missed the news, the U.S. East Coast has experienced several severe snow storms so far this winter. Just this past week, the Philadelphia-D.C. corridor got walloped twice, and the New York City area was hit as well.
So what stocks stand to benefit (or suffer) from winter weather? In this installment of The Finance Professor , I'll list my blizzard winners. (See my list of winter weather losers here.)
Note that the weather's impact will differ from industry to industry. Benefits to some of these companies could be short-lived and should not be extrapolated to longer periods of time. On the other hand, a drop in same-store sales by 1% or 2% could have a significant impact on earnings, which might be reflected in revisions to analysts' estimates. As always, do your homework to ascertain the impact, if any, on each stock.
Winner 1: Hardware Stores
Many people didn't expect -- and some had never experienced before -- storms of the severity or duration that that have hit the East Coast recently. In stormy situations, especially the underprepared are in need such things as shovels, ice-melting pellets or salt, snow blowers and fireplace equipment. And the best place to find all of these items at once is a hardware store.
When it comes to hardware, the largest retailers are the two major home improvement stores, Home Depot (HD) and Lowe's (LOW). Normally, the winter is a slow season for these companies. These storms are likely to boost sales in an otherwise off-season.
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