After two months of winter in Boston, I begin to get a little punch-drunk.
Perhaps that's why, as big snowflakes fell last night, I decided to devote today's column to four stocks that have something to do with snow.
Polaris Industries (PII), based in Edina, Minn., makes snowmobiles as well as all-terrain vehicles and motorcycles. It has just reported record earnings for 2012, it has increased earnings three years in a row, and it hasn't had a loss in at least 10 years.
Over the past decade, Polaris' stock has run up more than 600%. Now it sells for about $85 a share, which is 19x earnings and 8x book value (corporate net worth per share). One can make a case that Polaris is worth it. But as a value investor, I'd rather wait for some bad news before buying this stock.
Vail Resorts (MTN), headquartered in Broomfield, Colo., operates several ski resorts, including Vail Mountain, Breckenridge Mountain and Beaver Creek Resort. This is a stock I sold short in my hedge-fund days. If I were running a hedge fund today, I would probably sell it short again.
The shares are trading at 206x earnings and 45x estimated fiscal 2013 earnings. Those multiples reek of investor enthusiasm -- excessive enthusiasm in my view. I do agree that consumers are on the comeback trail, but in my view they are walking, not running -- or skiing. Since Vail Resorts has an erratic earnings history and a balance sheet that's no better than average, it doesn't impress me.
Jarden (JAH), out of Rye, N.Y., makes K2 skis and snowboards. It also manufactures a wide variety of other consumer products, including Coleman camping gear, Oster blenders and Mr. Coffee. It's a first-rate brand lineup, and the company has been profitable in nine of the past 10 years.
Earnings have been inconsistent. And debt, at 215% of equity, is far above my preferred level. So it's a mixed bag. Adding to the confusion, the stock looks cheap on the basis of its price-to-sales ratio of 0.7x but a little on the expensive side at about 17x earnings and 2.6x book value.
On balance, I'd side with the bulls here. The past two years have been good, and last year saw record earnings. Analysts expect the progress to continue.
Then there's Columbia Sportswear (COLM), a leading maker of winter jackets. I've owned this Portland, Ore., company in the past, but I don't much like it at current quotes. I believe this stock should sell for an average multiple, 15x earnings or so. It currently goes for a multiple of 19.
And I would like to see Columbia get its return on stockholders' equity back up into the teens, where it was six to eight years ago. In recent years it has been in single digits.