Cold Weather and Hot Investments
Warren Buffett says you should invest in what you know. And he’s right. There’s no sense in trying to learn all the ins and outs of something you’re not REALLY interested in.
If you love the latest tech, chances are you already know a little bit about what makes those products work. If you’re interested in medicine, then you’ve probably already got a handle on what companies are making new drugs that will change the course of history.
For me, what I really know (or more what I really love) is winter. I’m an avid snowboarder. I started skiing when I was a little kid and stuck with it for over 20 years before trading in my skis for a snowboard and falling in love all over again.
Endless Summer Winter
I go on trips to find the best snow whenever I can. I’m even planning a trip to the Andes so I can ride while it's warm here. It’s like the movie Endless Summer, but with snow.
And my love of all things winter has led me to seek out companies that are involved with the sports I love. If I find a good company and a good opportunity to invest, call me a shareholder. So, when I heard that this winter was going to be one for the record books, I couldn’t help but do a little digging to see how I could profit while I enjoyed the fresh powder it brings.
And I found a couple that are sure to see some huge profits this year — maybe as soon as next month, when one of them reports earnings. I recently recommended the best one to my readers in The Wealth Advisory. We invested less than a month ago and already have an 11% profit. That’s just going to go up when management reports on the stellar winter they’re having.
Now, I can’t give that one away — it’s a perk for being a premium subscriber. But I’ve got another for you today that’s going to be almost as good.
Big Money in Big Mountains
Think about it: Lift tickets are NEVER on sale. If the snow is good, they sell a lot at a really high price. If the snow is terrible, they still sell a bunch at the same high price. There are always people like me trying to get out and enjoy a few turns every winter — no matter what the snow looks like on the slopes. It’s a pretty solid investment for a big company.
And in the age of corporate investment in everything, the number of family-owned ski resorts has been dropping for years. Big investors are moving in and buying up the properties and then contracting out to other big firms to run the places.
Vail (NYSE: MTN) is a pretty big one. It owns and operates resorts in the American Rockies and Sierra Nevada mountain ranges. But that stock has been going up since it became public and is pretty pricey at this point, and maybe even due for a pullback. Plus, at least three of Vail’s resorts out in Lake Tahoe just got about 10 feet of snow in less than two days and are closed for the time being while the Lake deals with all that powder — which is up to the bottom of the chair lifts in some places.
But there’s another that has resorts up and down the West Coast (plus some in Canada to combat warmer temperatures down south) and still has the lifts spinning and skiers and boarders carving up the slopes. It’s even got a couple out here on the East Coast that are going to benefit from the record cold temperatures we’ll be seeing this winter season.
It’s called Intrawest Resorts Holdings (NYSE: SNOW), and the company owns several world-class ski resorts that have been getting pounded with both snow and customers since early November of last year.
SNOW stock went on a tear last year after a pretty awesome winter on the West Coast, hitting all-time highs towards the end of December. But it’s pulled back over the past couple of weeks and is presenting a great opportunity to get in low before earnings next month.
The snow fanatics have been hitting the slopes since November, and all that freshly carved powder is bringing in some serious dry powder in the form of ticket sales. This earnings report is sure to send the shares even higher than the highs they hit last month.
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Fresh Powder, Dry Powder, and Gnarly Fundamentals
All the fresh powder is going to lead to a record year as far as ticket sales are concerned. And we’re talking about a company that brought in over half a billion dollars last year. With an even earlier start to winter and way more snow, this year is going to blow the last one out of the (frozen) water!
And the company itself is solid by value investing standards, too. It’s undervalued compared to its peers, with P/E, P/S, and P/CF all much lower than the industry average. And even in the warm, dry winters from the past few years, it has been steadily growing revenue.
Oh, and over those five kind of crummy winter seasons, the folks running the show have still managed to cut long-term debt almost in half. So, it’s not just a gamble on big snow. It’s a great investment even in a slow season.
I know snow, and I know winter sports. And I know that this is going to be one of the best years we’ve seen in a long time. So, if you want to get some hot profits from a cold season, Intrawest Resorts is a strong buy, especially if you can pick it up before the next earnings report.
To investing with integrity (in what you know),
Follow me on Twitter @AllBeingsEqual
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