Profit From One Of The Worst El Niños Ever

The vast majority of climatologists are expecting a particularly harsh El Niño this year will result in a cold winter for most of the United States. A new report by Macquarie Research analyst Laurent Vasilescu discussed exactly how cold it could get this winter and what stock to buy to profit from chilly temperatures.

What To Expect

Last winter, a Polar Vortex drove arctic air down into the United States and produced extremely cold temperatures for most of the country. According to Macquarie climatologists, early indicators show that the same scenario will likely play out this winter as well.

Related Link: Nomura: Warnings Of A Coming Surge In Food Prices, Fears Worst El Niño Since 1950

Why Trust Macquarie?

Macquarie is currently the fourth largest physical natural gas trader in the United States, and the firm has hired a team of top climatologists to assess weather patterns and determine their impact on natural gas prices. However, the climatologist team is also useful in predicting weather patterns that could have an impact on other areas of the market, such as winter clothing retailers.

How To Play It

With natural gas prices caught in the unpredictably volatile commodity downturn, Vasilescu recommended winter clothing as the safest bet for playing another cold winter. In particular, Macquarie recommends Outperform-rated VF Corp, owners of the North Face and Timberland brands.

Other names in the space include Deckers Outdoor and Columbia Sportswear, but Macquarie believes that VF Corp is the preferred buy.

“We remain Neutral on Deckers due to its 70 percent dependency on rising Chinese labor and industry wide, record high leather prices,” Vasilescu explained.

The firm maintains an Underperform rating on Columbia due to its weak operating margins.