The Trend

Winter 2016-17: How to Trade the Snow

Winter is here.  And with winter comes snow.

And with snow comes the back-aching shoveling, cancelled events, the flu, infuriatingly bad drivers, and aggravation.

But it also offers plenty of opportunity.

Look at the flu season, for example. 

As any one with a respiratory system will tell you, this time of year isn’t always fun... unless, of course, you’re an investor in flu-related, coughing, sniffling, remedy stocks that typically take off around this time of year.

Clorox (CLX), for example, has an historical tendency to appreciate every flu season, as do pharmacy-related stocks, like Rite Aid (RAD) and CVS Health (CVS). Then, there’s ProPhase Labs. Inc. (PRPH), the maker of Cold-EEZE products, which has a tendency to move higher in the colder, winter months of the year. 

But it’s not just the flu that offers opportunity.  It’s the snow.

When it snows, plow demand rockets for obvious reasons.  They allow businesses and residential communities to keep roads and lots free of ice and snow.  The last thing they want to do is get them sued because some genius didn’t know ice is slippery.

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One stock to watch is Douglas Dynamics (PLOW), which designs, manufactures and sells snow and ice control equipment.  The stock doubled this year alone.  Even Toro (TTC), which makes snow blowers, jumps around this time of year.  In fact, since November 2016, it has run from $47 to $56 already.

Salt is under heavier demand, too.  De-icing public roads requires it.  While there aren’t many pure plays on salt, one company to watch is Compass Minerals (CMP), which has a nice history of exploding this time every year.  It recently jumped from $70 to $82.50.

And finally, we want to look at generators in case the heat goes out.  

One company to watch is Generac (GNRC), which also has a good history of running in the colder months of the year.

Even natural gas puts in a brief rally here and there, as you can see with the United States Natural Gas Fund (UNG).

We may not enjoy winter.  But we can make the best of it for our portfolio’s sake.