Goldman’s wintry play: Cold-weather stocks that could keep your portfolio warm

The weather outside may be frightful, but Goldman Sachs has stock suggestions that could be delightful for investors' portfolios.

Goldman's options research team came out with a list of stocks that have "strong fundamental links to cold weather" — in other words, stocks that could do well as the weather gets colder.

This includes natural gas stocks like Southwestern Energy, which benefits from increased demand for home heating, along with consumer discretionary stocks like Domino's Pizza, which may benefit from a greater desire to have one's food delivered during frigid weather.

Also on the list are cold-weather apparel specialist Columbia Sportswear, car-parts providers Advance Auto Parts and AutoZone, and a few other energy and consumer discretionary companies.

The Goldman team, led by Katherine Fogertey and John Marshall, found that this group of stocks outperformed the S&P 500 by 9 percent in cold winters — and underperformed by 2 percent in warm ones.

Due to this divergence, they suggest buying bullish call options to profit from a potentially colder winter, explaining that "the options market is not pricing in the potential for these stocks to trade sharply higher if the cold weather of recent stays."

Yet not everyone is on board with the tundra trade.

"This is a horrendous idea," Oppenheimer head of technical analysis Ari Wald said Thursday on CNBC's "Trading Nation." "This is a strategy based solely on predicting what the weather is going to be."

The trade is indeed very likely to lose money if the weather turns warm. But in Goldman's defense, its argument is that the potential for an overly cold winter is currently being underappreciated, making these bets clever.

If forced to buy one of these stocks, Wald would choose Columbia Sportswear — a "big underperformer" that now looks to be forming a bottom.


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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