Can These Stocks Protect Your Portfolio from Cold Weather

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So far, the weather this winter has been unusually mild in the northern parts of the United States. However, it can be expected that nippy conditions are on their way to bug even the thickest skinned traders. Therefore, it is time to take a look at the stocks that could give you a warm feeling inside when the cold weather arrives. CMS Energy Corporation
CMS
is an energy company operating primarily in Michigan. The stock has been trading near its 52-week high, but a significant drop in temperatures would cause the Michiganites to crank up the heat in their houses. This could give a nice boost for the company's Q1 earnings, which would help the stock break to new 52-week highs. The stock also has a 3.84% dividend yield. Another utility company that could benefit from a colder weather is Wisconsin Energy Corporation
WEC
. The stock performed strongly in December and the cold weather could also give a nice boost for its Q1 of 2012. Wisconsin is another state that will more than likely get to enjoy “real” winter temperatures, which will make it a safer choice. Wisconsin Energy has a dividend yield of 3.47%. Deckers Outdoor Corporation
DECK
is an apparel play for the cold weather. The company's UGG shoes is a luxury brand for winter boots and becomes the shoe of choice once the temperatures gets too cold for open toe boots. The stock is down 25 percent in the past two months and recently broke below its 50-day and 200-day moving averages. However, strong winter sales could send the stock back above these technical levels. Lastly, Dick's Sporting Goods
DKS
that sells a number of outdoor clothing brands, such as he North Face and Columbia, could see a boost in sales if the cold winter weather hits the United States. The stock broke below its 50-day and 200-day moving averages in December and is down nearly 10 percent in the past month. Increased sales could help the company reverse this bearish trend. You can follow me on Twitter
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Bullish:
Traders who believe that the cold winter weather is on its way might want to consider the following trades:
  • Invest in utility companies that provide heating solutions for homes.
  • Natural gas has been in a bearish trend, but colder weather could boost the demand and price. The United States Natural Gas Fund ETF UNG is a good way to play this alternative.
  • Retailers selling winter apparel could see a sales boost. Macy's M and Cabela's CAB could provide profitable investment opportunities.
Bearish:
Traders who believe that this winter will exceptionally warm may consider alternative positions:
  • Buy puts on the natural gas futures.
  • A warmer weather tends to lower the price of agricultural products. Shorting the iPath Dow Jones-UBS Grains Subindex Total Return ETN JJG is one way to play this.
Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.
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