Big winter storm to hit first quarter GDP, but may give a boost to these stocks
This weekend’s winter storm continues to affect much of the U.S., and could even have a material impact on gross domestic product — but there are some companies that are likely to be beneficiaries. The storm is continuing to make its presence felt on Monday, with wind and below-freezing temperatures lingering even after much of the snow and freezing rain have now petered out. Flight cancellations and delays, restaurant and store closures, and power outages in parts of the U.S. are expected to remain a fixture for the time being. That could mean a hit to first quarter GDP in the range of 0.5 to 1.5 percentage points, according to Bank of America Securities’ U.S. economist Aditya Bhave in a note titled “Winter Storm Fern likely to be a substantial drag on 1Q growth.” On Monday, the companies with businesses most exposed to the storm took a hard hit. Restaurant stocks were down as a group, including Olive Garden parent Darden Restaurants and Restaurant Brands International. Airline stocks also took a hit amid ongoing cancellations, with Transportation Secretary Sean Duffy telling CNBC air travel will return to normal by Wednesday . Still, there are some businesses that have tended to get a lift from major storms in the past. Here are some of them. Costco The warehouse club chain is historically a major beneficiary of major storms, having benefited in the past from consumers loading up on staples ahead of any disruptions. That could help a stock that has been floundering as of late. Costco is up roughly 4% over the last 12 months, massively underperforming the broader market, amid worries of slowing membership and comp sales growth. COST YTD mountain Costco, YTD “COST has typically seen a surge in sales and traffic as these events approach and as consumers pantry load in preparation of major storms,” Mizuho’s David Bellinger wrote last week. “This should help the U.S. business to again comp the comp against a polar vortex in early 2025.” Bellinger has a base case price target of $1,000 for the stock. It was last roughly 2% away from that target. It’s up more than 13% this year. Douglas Dynamics The largest player in snow and ice removal that generates 60% of its EBITDA from that business is about to see additional upside from Fern — and not just in the immediate aftermath of the storm. D.A. Davidson’s Michael Shlisky hiked his target to $48, from $37, implying roughly 29% upside from Friday’s close. Shares of Douglas Dynamics are up about 15% already this year. PLOW 1D mountain Douglas Dynamics, 1-day performance “Users typically don’t head down to their dealers when the flakes start falling; instead, users take stock of their fleet (and their wallet) in April once snow season is over, and order accordingly for next winter,” Shlisky wrote Sunday. “We believe there could be modest 1Q upside as the company does its best to keep up with last-minute demand, but if this winter keeps up through February, the more-likely impacts could be seen in 3Q & 4Q,” he added. Tractor Supply, AutoZone Tractor Supply , AutoZone , and also O’Reilly Automotive are beneficiaries from storm preparation and clean up, according to Wells Fargo. “Winter weather typically drives Auto Parts sales (battery failures, etc.) while TSCO (apparel, heating products, shovels, etc.) and HD/LOW (exterior damage/repair, HVAC/ pipes, etc.) tend to benefit from pre-storm prep and post-storm cleanup,” wrote equity analyst Zachary Fadem. Shares of Tractor Supply are higher by more than 1% on Monday. AutoZone is higher by more than 2%, while O’Reilly Automotive has gained more than 1%.
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