Why Centrica plc, SSE plc & SKY plc Will Benefit From The Longest Winter In 50 Years

“Britain faces longest winter in 50 years after earliest ever arrival of Siberian swan”

Last week I saw the above headline in The Telegraph and across numerous other media formats throughout the week. Apparently, the UK is now facing its longest winter in 50 years after the first Bewick swan, which traditionally heralds the start of the season, arrived from Arctic Russia.

Around 300 of our feathered friends migrate 2,500 miles to spend the winter at Simbridge Wildfowl and Wetlands Trust in order to escape the approaching cold weather that follows closely behind them, an event that has been recorded since 1963.

This year, the first bird arrived on 11 October — 25 days earlier than last year and the earliest date on record.

As an investor, it can often pay to keep abreast of events such as these and seek out companies that stand to benefit.

Energy in focus

It is hardly surprising, then, that I’m drawn to Centrica (LSE: CNA) and SSE (LSE: SSE) as two potential candidates to profit from months of sub-zero temperatures, which will see customers turning up their heating in order to keep warm. Clearly, the more energy the company sells, the more money they make – this can be seen from the results of businesses, though it should be clear to investors that the opposite is also true, as underlying profits will fall should we see more mild weather going forward.

It doesn’t take much internet searching to be reminded of the short and long-term challenges facing the industry, with constant regulatory pressure surrounding how cleanly the energy is produced, mixed with the huge capital outlay associated with this cleaner production.

Additionally, these are more than just energy supply businesses: both have many other moving parts to their respective operations, all of which should be factored into any investment decision.

That said, both shares currently look attractive, trading on forecast multiples of just over 13 times earnings and yielding a bank-busting 5%-plus dividend, which is expected to rise at least in line with inflation. With the sector under pressure currently, the shares could look cheap down here should the outlook improve following a short-term boost from a cold snap.

More cosy nights in?

The next theme that investors could play is the potential on offer from SKY (LSE: SKY).

Let’s face it, when the weather outside is bitter cold, there is nothing us Brits like to do more than turning the heating up and relaxing on the sofa with a warm brew and a good film.

And, it seems, there are plenty of subscribers (old and new) willing to pay for their viewing pleasure.

In the full-year results announced in July, management hailed an excellent year of growth following investments made in content and innovation, which attracted record numbers to Sky and drove loyalty among existing customers to new highs – management noted that this had accelerated in Q4.

Investors, it seems, are happy to pay up for the optimistic outlook, with the shares currently around 17 times forecast earnings and expected to yield around 3.3%. That’s not to be sniffed at and higher than the forecast median yield of all dividend payers according to data from Stockopedia.

However, with the potential cold weather boost, the shares could well look cheap from here, leaving investors with a warm glow emanating from their portfolio.

This Fool’s final thought

As we can see from the chart above, there has been a mixed performance from these three FTSE 100 constituents when compared to their benchmark.

And though it is entirely conceivable that all three would benefit from a prolonged cold snap, I’m pretty sure that I hear similar stories every year – the results of these ‘prophecies’ are usually mixed at best.

In my view, investors should look to put their hard earned cash into businesses that can turn a profit whatever the weather.

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Dave Sullivan has no position in any shares mentioned. The Motley Fool UK has recommended Centrica and Sky. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.