These stocks could benefit from unseasonably warm temperatures, says Jefferies

Published Sun, Feb 2 20202:01 PM EST

(This story is for CNBC PRO subscribers only.) Unusually warm temperatures over the last three months have impacted companies that depend on certain weather trends for business, and it could become an increasingly important theme as companies continue to report quarterly results, Jefferies said in a note to clients recently. Analyzing weather data, the firm found that over the last three months 48 U.S. states posted higher-than-normal temperatures. The two exceptions were Arizona and New Mexico. Warmer temperatures have been mentioned on earnings conference calls this quarter, including by VF Corp chairman and CEO Steven Rendle who said it hurt sales. "We saw an uptick in the promotional activity starting pretty early and specifically with our cold weather brands. And the results there really hit The North Face and Timberland," he said on the company's Jan. 23 third quarter earnings conference call. "What we saw in our product category, specifically cold weather product, was a slow start to the season." But unseasonably warm temperatures can also be bullish for some companies. Scanning through its coverage universe, Jefferies found a number of companies that stand to benefit. Building products "The warmer temperatures could have allowed for more construction days than normal in Nov and Dec. If construction activity held up through the winter due to warmer temperatures, this could be beneficial to new resi construction plays." The firm said TopBuild , Owens Corning , Martin Marietta , Summit Materials and Vulcan Materials could benefit, and has a buy rating on each of these stocks. However analyst Phil Ng did warn that some of the strength at the end of the quarter could have been muted by a rainy October, which is typically a key month for construction ahead of winter. Chemical companies "Warm weather with less rain is...usually positive for retail sales, which could help companies with a significant tilt towards consumer personal care markets." This includes Ashland Global Holdings , which the firm has a buy rating on, as well as Croda , which the firm says to hold. "If the combination of warm weather and reduced rainfall persists through the balance of Q1, it would likely pull forward crop plantings." Earlier plantings could benefit companies like FMC and Corteva , both of which the firm says to buy. "Unseasonably warm weather should pull lead to stronger-than-normal external construction and maintenance projects." Jefferies analyst Laurence Alexander said this could help Sherwin-Williams . He has a hold rating and $600 target on the stock. Discretionary "Management [from Callaway Golf] pointed out that while a warm January would not be material to the year (~3% of rounds played), if winter is relatively mild, it expedites course thawing and portends a stronger spring. This would potentially drive more upside." The firm has a buy rating and $28 target on shares of Callaway Golf. - CNBC's Michael Bloom contributed reporting.

A man enjoys the warm weather while sitting in Union Square in New York City.

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(This story is for CNBC PRO subscribers only.)

Unusually warm temperatures over the last three months have impacted companies that depend on certain weather trends for business, and it could become an increasingly important theme as companies continue to report quarterly results, Jefferies said in a note to clients recently.

Analyzing weather data, the firm found that over the last three months 48 U.S. states posted higher-than-normal temperatures. The two exceptions were Arizona and New Mexico.

Warmer temperatures have been mentioned on earnings conference calls this quarter, including by VF Corp chairman and CEO Steven Rendle who said it hurt sales.

"We saw an uptick in the promotional activity starting pretty early and specifically with our cold weather brands. And the results there really hit The North Face and Timberland," he said on the company's Jan. 23 third quarter earnings conference call. "What we saw in our product category, specifically cold weather product, was a slow start to the season."

But unseasonably warm temperatures can also be bullish for some companies. Scanning through its coverage universe, Jefferies found a number of companies that stand to benefit.