Winter Winners: Six Industries That Could Reap a Blizzard of Profits
According to IHS Global Insight, the states of New York ($700 million per day), Illinois ($400 million), Pennsylvania ($370 million), Ohio ($300 million) and New Jersey ($289 million) have suffered the biggest financial wallop from the recent Groundhog Day storm. Perhaps the industry that has lost the most money from this winter's onslaught is the airlines, which have been forced to cancel thousands of flights each time a storm rolls across the nation.
But one industry's blizzard is another industry's windfall. Beyond the obvious bad-weather beneficiaries, such as the oil and energy-related industries, IBISWorld senior industry analyst Toon Van Beeck sees six categories benefiting most from this year's snows, which have affected all 50 states to one degree or another.
Phosphate and other mineral mining: Got salt? Many states and municipalities are close to running out, with most of February and March still to come. Rock-salt mining or quarrying accounts for about 6% of the industry, which surely increased this year with the Midwest and Northeast suffering through multiple severe storms. The top three North American salt producers have been Rohm & Haas/Morton Salt and Cargill, which are privately run, and Compass Mineral Intl. (CMP). Compass Mineral, which started January at about $88 a share, is up 6.6% over the last month and closed at $93.81 on Friday, Feb. 4.
Home improvement stores: Home Depot (HD) and Lowes (LOW) will likely benefit from consumers purchasing additional shovels, snow blowers, snow-plow equipment, heaters and salt. "Consumers tend to stock up on these key items in preparation of coming storm systems, and these key retailers are major suppliers to the public," says Van Beeck.
Home Depot shares, which closed at $36.80 on Friday, are up 6.1% over the last month. Lowes is up 0.61% over the last month, closing at $24.71 on Friday.
Online retailers: When snow and bad weather keep consumers from going outside to shop, they shop online. Expect sales on Amazon (AMZN), Overstock (OSTK) and Netflix (NFLX) to move higher in weeks to come, especially if the blizzards persist. "Cabin fever can be cured with some type of retail therapy," says Van Beeck.
Over the last month, shares of Amazon, which ended Friday at $175.93, are down 4.9%. Overstock, which closed at $14.93 on Friday, has lost 9.3%. But Netflix has surged 21.3% in the last month, closing at $220.07 on Friday.
Ski and snowboard resorts: This is a $2.6 billion industry in the U.S., and with all the snow, this season could be as strong as 2007-08 when a record 60 million skiers flocked to U.S. ski resorts. Private companies such as Intrawest, Booth Creek Ski Holdings, Boyne USA Resorts and Aspen Ski Co. will thrive in this brutal winter weather.
Publicly traded Vail Resorts (MTN) should also see higher profits once the season is done. Vail, which traded at $49.01 at the close on Friday, is down 5.68% over the last month.
All-terrain vehicles, golf carts and snowmobile manufacturing: In this $8.15 billion industry, snowmobiles and parts generate 15.3% of revenues. Demand for snowmobiles may increase this year due to larger crowds at ski resorts, but the monster storms have also led to increased snowmobile use for search and rescue at ski resorts and elsewhere. Honda (HMC), Polaris Industries (PII), Deere (DE) and Arctic Cat (ACAT) are the major players likely to benefit.
Honda shares, trading at $43.21 at the close on Friday, are up 9.1% over the last month, while shares of Polaris, which closed at $77.98 on Friday, have risen 4.1% in the last month. Deere is up 12.2% over the last month and closed Friday at $93.21. Arctic Cat ended Friday at $16.81, up a healthy 18.3% over the last month.
Don't let the freezing temps, snow and ice keep you from moving money into these potentially hot areas.