These 2 Dow Stocks Need Good Weather the Most

The Dow Jones Industrials (DJINDICES: ^DJI  ) haven't been immune to the tough winter that many parts of the U.S. suffered through this year, with a drop in demand for goods and services and plenty of logistical challenges for companies to overcome in getting their products in front of their customers. Yet although weather has an impact on most of the members of the Dow Jones Industrials, Home Depot (NYSE: HD  ) and Travelers (NYSE: TRV  ) have the most to gain or lose from Mother Nature's favor -- or scorn -- over the next several months.


Source: NASA Goddard Space Flight Center.

For Home Depot, a long winter meant a delay in the gardening season in many parts of the country. With Home Depot having a fiscal quarter that ended in April, the home-improvement retailer won't suffer the same fate as many other retailers with March 31 fiscal-quarter ending dates, because Easter's shift later in the calendar won't push the popular holiday into a different quarter. Nevertheless, analysts have already pushed down their earnings estimates for Home Depot by a couple of pennies per share on the assumption that winter weather will have an adverse effect on its net income.

Source: Home Depot.

That makes it all the more important for Home Depot to deliver better results in the current quarter. If the weather allows for a normal ramp-up to spring even in the colder areas of the nation, then the net impact could well be positive for Home Depot. Shoppers with greater-than-normal amounts of cabin fever are itching to get into their gardens and start working -- and are willing to spend up in order to get the job done. On the other hand, if the weather continues to be dicey -- and with a winter storm set to hit the Rockies today, it looks like Mother Nature is still throwing curveballs at weather forecasters -- then Home Depot could permanently lose an entire growing season in some areas and therefore take a one-time profit hit.

Travelers, meanwhile, has had the weather smile on it for more than a year now. After disastrous hurricanes in the two previous years, Travelers enjoyed many fewer catastrophic losses in 2013, and profits for the insurance giant soared as a result. The winter months haven't led to the same amount of devastation that a hurricane would, and so Travelers was once again able to beat expectations dramatically in the first quarter.

Inevitably, though, Travelers' good luck will end, and smart investors are already preparing for earnings to fall slightly for the full 2014 year. Yet if storms once again fail to materialize, then Travelers has the potential to put up another blockbuster earnings result this hurricane season, which starts in just three weeks from now.

Weather has an impact on business everywhere, but for Home Depot and Travelers, the weather's impact is more direct than with many of its peers in the Dow Jones Industrials. Dow investors should keep a close eye on these two companies to see how the weather affects them both now and into the future.

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