Top Four Winter Stocks

The market appears strong, but we’re not taking a chance. Cold weather stocks appear to be a low-risk play this winter.
Gas prices are at multi-year lows and we’re steadily adding more and more jobs to the economy each month.
So the next few months might prove to be great for the entire market. But why take that chance?
Winter is coming. There’s not much we can do about that. Last year was the worst winter in 30 years in terms of average temperatures.
With that, let’s look at some stocks that should benefit nicely from the winter months and the surge in discretionary income. Here are four winter stocks that could keep your portfolio warm this winter:

Winter Stock No. 1: Columbia Sportswear Company (NASDAQ: COLM)

Columbia is an outdoor apparel company. Somewhat small, with a $3.1 billion market cap, it’s also underrated. It has a solid balance sheet with no debt and offers a 1.3% dividend yield.
It’s already seeing momentum this holiday season and expects revenue growth to be in the double digits for fiscal 2015. And it will likely become more of a household name as it increases its retail presence.
Columbia only operates 80 retail and outlet stores, but plans to open a number of Columbia, Performance Fishing Gear and Sorel branded stores going forward.

Winter Stock No. 2: Burlington Stores (NYSE: BURL)

Burlington is a retailer of coats and various outerwear. It’s not a huge retailer, with just under 600 stores across most of the U.S. and a market cap of $3.3 billion. It’s quietly been one of the best-performing retail names over the last year, with its stock up nearly 60% over the last 12 months.
That outperformance could continue. Burlington is expected to grow earnings 30% next year, but it trades at a forward price-to-earnings ratio (based on next year’s earnings estimates) of 21. The company is still seeing the benefits of the turnaround that Bain Capital helped orchestrate after taking it private in 2006.
Now it has a revamped inventory and has been increasing cash flow. It also has plans to continue increasing its footprint by opening more outlets across the U.S.

Winter Stock No. 3: Polaris Industries (NYSE: PII)

Polaris is a manufacturer of various ATVs and snowmobiles. It’s one of the biggest players in the space and one of the best when it comes to lean manufacturing. With that, it has a nearly 20% operating margin and 44% return on invested capital, both at decade highs.
Arctic Cat (NASDAQ: ACAT) is another recreational vehicle company. Its market cap is less than $500 million. But there are positives to this small player, which has no debt and offers a 1.5% dividend yield.
And it does trade at a cheaper valuation when compared to Polaris . Arctic trades at a price-to-earnings ratio of 15 and a P/E-to-growth rate ratio of under 1.0. Meanwhile, Polaris trades at 24 and 2.1, respectively.
Both will benefit from increased sales of ATVs and snowmobiles as we head into a winter that’s sure to see serious snowfall, if last year was any indication.

Winter Stock No. 4: Home Depot (NYSE: HD)

Home Depot is a less obvious play on the winter weather. The home improvement retailer is a great play when it comes to the resurgence in the homebuilding and remodeling market, but it’s also a solid play on colder weather.
When we see another major arctic blast, inevitably there will be a wave of people rushing out to home improvement stores like Home Depot to buy up snow shovels and deicing materials like rock salt.
Along the lines of less obvious cold weather plays, there’s also Generac Holdings (NYSE: GNRC) and Toro Co (NYSE: TTC).
Generac Holdings is a $3.2 billion market cap company and maker of generators. Toro makes tuft management/irrigation systems, but also makes various slow blowers and snow removal products. Both are attractively priced, trading at price-to-earnings ratios based on next year’s earnings estimates of 13 and 16, respectively.
It’s inevitable that cold weather will force consumers into Burlington stores, or to pick up Columbia and The North Face coats. Then there’s the snow, which some will see as a recreational opportunity (think: ATVs and snowmobiles), while others see it as a pain (think: shovels, generators and snow plows).
Regardless, there seems to be something for every investor when the cold weather hits.
Don’t fear the cold. Profit from it.

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