When the tape is as red as today's, it's often hard to find stocks that can carry their upside momentum. However, I have come across 3 that are well worth a look. Amidst the turmoil that has been the last few trading days, these names have held up remarkably well.
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A month and a half ago, I advised investors about Columbia Sportswear (NASDAQ:COLM), citing how the company's seasonal products would be a huge headwind in the face of the warmer weather. This unusually warm weather is due to something called "El Niño," which I touch upon in more depth in that article.
The reality is that in this situation, it is easier to pick out stocks that benefit from this warm weather than it is to guess which will flounder in the heat. Though true that companies with such seasonal products, like Columbia, will not perform well in a warmer environment (COLM is down 15.5% since publication), it is not that easy to see for a lot of other companies, especially retailers. El Niño has created a lot of fog in this sector. Betting on companies like Abercrombie & Fitch (NYSE:ANF) and Nike (NYSE:NKE) are total crapshoots because their merchandise is well diversified. (In case you were wondering, Abercrombie & Fitch popped 25% after its most recent earnings announcement, and Nike fell roughly 2.5%). I think that it is best to completely avoid the retail sector at this moment -- I would wait until after Q4 earnings -- because there are some clear beneficiaries of this warmer-weather-trade. Below is a list of sectors that should benefit from the warmer weather; you've probably already been able to think of some of these as plays on the current weather, but I hope that some are new to you... 1255 words remaining in this article. Read them here for free. |