Heatwave Stocks: Summer Looks Good on These Investments

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Jun. 17 2021, Published 10:56 a.m. ET

Salt Lake City has met its all-time heat record of 107 degrees, and 40 million people are getting ready to experience temperatures in excess of 100 degrees. Summer 2021 is approaching with brute force, and some stocks are good buys for the heatwave

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Now that "sell in May" is behind us, trading volumes have recovered and certain sectors are primed to outperform, from travel to refrigeration. What stocks fare better in warm weather? Crack open a cold one from the fridge and turn on your AC as you prepare to do your due diligence on these heatwave stocks from across the spectrum.

Travel stocks that enjoy heatwaves

With warm weather and borders reopening following the COVID-19 pandemic, cruise lines are benefitting. Carnival (CCL), Royal Caribbean Cruises (RCL), and Norwegian Cruise Line (NCLH) are top contenders. Vail Resorts (MTN) and Southwest Airlines (LUV) are similar tourism plays. Investors who prefer more balanced exposure could consider funds tracking the Russell 1000 index.

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Refrigeration stocks for the heatwave days

Food preservation techniques like salting, smoking, and pickling are great—but thanks to modern refrigeration, we have a lot more options. And beyond keeping our beer cold, refrigeration helps us achieve innovation, such as mass vaccine distribution.

As the heatwave carries on, Carrier Global (CARR) and Emerson Electric (EMR) are seeing gains, thanks in part to increased demand for their refrigeration products. Watsco (WSO) stock has shown consistent strength over the warm seasons and its lifetime. CryoPort (CYRX), Johnson Controls International (JCI), and Archrock (AROC) are some more volatile refrigeration stocks.

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An alternative to refrigeration stocks would be dry ice stocks, which have become particularly relevant in vaccination campaigns. Linde (LIN) and Air Products and Chemicals (APD) are two public companies dealing with dry ice production.

Consumer durables to consider as air conditioning becomes a must

Whirlpool (WHR), Blue Star (BLUESTARCO), and Bajaj Electronics (BAJAJELEC) all produce cooling products, including air conditioning. The latter two trade on the National Stock Exchange of India (NSE), but American depositary receipts (ADRs) are available for U.S. retail investors to purchase.

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Energy stocks are a solid target during heatwaves

When energy demand rises, so do energy stocks. And this year, green energy stocks have seen an extra boost by the growing interest in ESG (environmental, social and corporate governance) investments. General Electric (GE) and Brookfield Renewable Partners (BEP) are positioned well as summer makes its way.

A not-so-surprising heatwave stock: Beer

Demand for cold beer tends to increase in summer. The top stocks for companies managing beer brands include Anheuser-Busch InBev (BUD), United Breweries (CCU), and Boston Beer (SAM). You can also find beer exposure in many consumer staples funds, including the Consumer Staples Select Sector SPDR ETF (XLP).

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