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4 Stocks Poised to Win -- or Lose -- From the Expanding Drought

>>5 Hated Earnings Stocks That Deserve Your Love

To maintain growth, Lindsay is adding a lot of technical functionality to its equipment. For example, sensors can detect soil and atmospheric conditions and turn on by themselves only when needed. Farmers hate to water their crops just ahead of a major rain storm, and even those farmers who didn't see the need to preserve water in the past are now beginning to do so.

Titan Machinery

This company operates in two industries: construction and agriculture. The construction end of the business has been quite weak, offset by a robust farm-belt business. Trouble is, that segment may also soon be vulnerable.

Titan (TITN) sells and rents tractors, tillers and other farm equipment at a network of stores situated from north to south that seems to lie directly on top of all of the regions beset by drought. Analysts who follow Titan at research firm M Partners note that "the recent declines in commodity prices and uncertainty about weather and soil conditions this year has left farmers cautious about the upcoming agricultural year and this caution will likely temper equipment purchase during 1H/F14." That's a reference to fiscal year 2014, which ends next January.

Indeed, analysts' consensus profit forecasts have been steadily dropping in recent months. The EPS outlook for fiscal 2014 has slipped roughly 10% in the past 90 days to around $2.30 a share, and analysts now expect the same result for fiscal 2015 as well. If the drought takes an ever deeper bite this year, then those forecasts will need to fall yet more.

Wendy's

In response to the prolonged drought, farmers have been taking their cattle to market at a rapid pace. Without enough hay to go around, it's wiser to cull the herd. That actually helped to lower beef prices in 2013 as slaughterhouses had an abundance of meat to process. Now, with herds greatly thinned, slaughterhouses won't be nearly as busy this year -- which should drive beef prices up.

Rising beef prices will ding all kinds of restaurants, but the impact will be most deeply felt at the burger chains, Which chain will be his the hardest? It's hard to know, but it's notable that Wendy's (WEN) is the most richly valued stock in the group, trading for nearly 30 times projected 2014 profits. Rival Burger King (BKW) trades for about 21 times projected 2014 profits while McDonald's (MCD) trades for a more reasonable 15 times projected 2014 profits.

Stock quotes in this article: BG, LNN, WEN, TITN 

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