It may be time to consider winterizing your portfolio with consumer discretionary selections like winter leisure products, resorts, and apparel.
The end of the year is approaching, and that means pulling out sweaters, boots, and maybe some skis or snowmobiles. Once you're clad in all your finest thermals, perhaps you should consider looking at your portfolio to see if it still fits.
The winter weather forecast for the northern Great Plains to the eastern U.S. is calling for cold and snowy conditions, according to AccuWeather’s initial seasonal forecast. And the northeast U.S. may see above-normal snows this winter, which may mean more chances for skiers and snowmobilers to get out and enjoy the season.
"I think the Northeast is going to see more than just a few, maybe several, systems in the course of the season," said Paul Pastelok, long-range forecaster for AccuWeather, who added that this year’s winter may feature early and frequent snowfall.
The northern Great Plains may see snows starting as early as December that could allow snowpack to build, while in the Great Lakes region, cold weather in early winter may meet warmer waters over the water and bring on lake-effect snows, Pastelok said.
The likelihood of a La Niña weather pattern has diminished, according to the National Oceanic and Atmospheric Administration (NOAA), which says the sea surface temperatures in the Pacific aren’t right for the condition. La Niña weather conditions are the opposite of El Niño, and they often follow El Niño patterns.
That’s probably disappointing news for skiers in the Pacific Northwest, who usually benefit from La Niña’s northern-focused storm track. As an example, during the 1998 to 1999 ski season, Mt. Baker in Washington saw 95 feet of snow, the most snow of any location in the world during a single season, according to OnTheSnow.com, a news site for skiing enthusiasts.
Regardless of the quantity and location of this year’s snowfall, there are a few ways to consider publicly traded companies that focus on winter sports.
The most obvious are sporting-goods manufacturers. Among them are outdoor equipment company Black Diamond (BDE) and Performance Sports Group (PSG), which makes ice-hockey equipment, among other items.
Snowmobile maker Polaris Industries (PII) has seen its value halve since November 2014, and in October it was hit with a shareholder class-action lawsuit. Arctic Cat (ACAT), a maker of snowmobiles and ATVs, is also in a share slump.
Another way to look at winter sports is to consider ski resorts. There are three publicly traded ski resorts: Vail Resorts (MTN), Intrawest Resorts Holdings (SNOW), and Peak Resorts (SKIS). Vail Resorts has seen strong momentum, with earnings per share growth of 35.9% last year, according to Zacks Investment Research. Intrawest and Peak Resorts are also drawing analyst attention.
Finally, you might consider researching companies like Dick’s Sporting Goods (DKS), Winmark Corporation (WINA), which owns sport equipment reseller Play It Again Sports, and Big 5 Sporting Goods Corporation (BGFV).
Winter may be coming, but there’s no reason to leave your portfolio in the cold.
Use Stock Screener to narrow selections based on sectors like consumer discretionary. Log in at tdameritrade.com > Research & Ideas > Screeners > Stocks.
Do Not Sell or Share My Personal Information
Content intended for educational/informational purposes only. Not investment advice, or a recommendation of any security, strategy, or account type.
Be sure to understand all risks involved with each strategy, including commission costs, before attempting to place any trade. Clients must consider all relevant risk factors, including their own personal financial situations, before trading.
TD Ameritrade and all third parties mentioned are separate and unaffiliated and are not responsible for each other’s policies or services.
Inclusion of specific security names in this commentary does not constitute a recommendation from TD Ameritrade to buy, sell, or hold.
Market volatility, volume, and system availability may delay account access and trade executions.
Past performance of a security or strategy does not guarantee future results or success.
Options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. Options trading subject to TD Ameritrade review and approval. Please read Characteristics and Risks of Standardized Options before investing in options.
Supporting documentation for any claims, comparisons, statistics, or other technical data will be supplied upon request.
This is not an offer or solicitation in any jurisdiction where we are not authorized to do business or where such offer or solicitation would be contrary to the local laws and regulations of that jurisdiction, including, but not limited to persons residing in Australia, Canada, Hong Kong, Japan, Saudi Arabia, Singapore, UK, and the countries of the European Union.
TD Ameritrade, Inc., member FINRA/SIPC, a subsidiary of The Charles Schwab Corporation. © 2024 Charles Schwab & Co. Inc. All rights reserved.