Sun Spots and Ice Ages
If I were to tell you that there could be empirical evidence for the idea that PLOW may be an upcoming super-hot dot-com-like stock scorcher, you probably would not believe it. The points leading up to that in this article may be surprising, but they are logical, empirical, and simple, and they can be summed-up by the following argument:
1. Sunspots have drastically reduced in number on the surface of the sun.
2. Such sunspot reduction has been associated with solar output reduction and mini ice ages in the past (second half of 1600s and into the 1700s, 1816 the so-called "year of no summer").
3. Solar output reduction currently appears to be the fastest in the past 10,000 years.
4. An ice age or mini ice age is commencing, as evidenced by the unusually cold winter that parts of the world are having this winter-which is cooling that actually started last spring)
5. If the world is colder there is more snowfall.
6. With more snowfall, more plows are needed to clear roads and etc.
Therefore, a sunspot-caused mini ice age will greatly warm shares of Douglas Dynamics (NYSE:PLOW).
Each point in this argument builds to the next, to ultimately arrive at the solid, even if speculative, conclusion. The idea that sunspot reduction causes ice age scenarios on Earth is currently somewhat widely discussed by solar scientists. This is merely a theory, at this point, but it is a reasonable theory, since past instances back it up.
If an ice age were to be commencing, this would, at the very least, cause in the "snow-line" of the United States and other countries to descend much further south (or north, for the Southern Hemisphere) than it has in any living person's memory. Snowy weather could last longer and be much harsher than usual. In other words, (a) if the surface area of the landmass of Earth that receives significant snow in the winter is about greatly increase in size in, say, the next 1-5 years, and (b) if the net total amount of snowfall on planet earth is also about to increase dramatically, then the demand for snow removal equipment could grow significantly, perhaps stratospherically.
PLOW: The Dot-Com Stock for an Ice Age
Consider Atlanta, which is not considered a town which receives any sort of significant snowfall in any given decade. In an ice age scenario, it would become a snowy town, which, at-the-moment, it is unprepared for, as the recent news of the February 2014 snow disaster in Atlanta hints at. In an ice age, Atlanta would need to acquire an entire, massive fleet of snow removal equipment. And that's just one city, in just one country. Little Rock, Albuquerque, Houston, Baton Rouge, and scores of other cities, small to large, worldwide, that currently have unsubstantial snow removal capacities (if even that) may need entire convoys. And add to this cities that currently have only light snow removal capacities (for example, Louisville) will need to significantly increase their capacity for removal, as they will have to move into a far more intensive snow removal and salting regimen.
In other words, in a mini-ice age or larger, the new customer base is staggering for PLOW, and heightened needs for the existing customer regions for PLOW could also be staggering, as existing and older equipment will have to be updated more quickly. Summary: an ice age or mini-ice age could, theoretically speaking, turn PLOW into a hot stock-perhaps even dot-com-like-into the foreseeable future.
It's Pretty Simple: More Plows Are Needed to Remove More Snow Across More Surface Area
Every year for the past half dozen I have vacationed during the second week of August in Muskegon Michigan, on the shore of Lake Michigan. I am quite used to the consistency of the weather: always in the 70s-90s each day, water somewhere in the 60s or 70s. And from age 5 to 18 I have spent every summer-the entire summer-at Lake Michigan (my parents were intensive sailors of Lake Michigan when I was a child). So I am very familiar with the weather patterns of Lake Michigan. That's why this past year (2013) when I was in Muskegon again in August, I was so surprised to notice that there was no resemblance, weather-wise, to any time I had been to Lake Michigan in the summer previously in my entire life. It was in the 40s at night (if I recall, one night it was 39), the water was in the lower 50s or upper 40s, the days were very cool/cold, more like an October climate in Michigan than early/mid August. Since I was a kid, Michigan has always been viewed as being the hottest and muggiest time of the Year in Michigan, so I had never seen anything like this, and it seems this was the theme for all of last year here in Michigan: cooler weather. I first noticed this in late April, when I was at a Detroit Tigers game watching Max Scherzer pitch in 30 degrees and snow. Is this cooling something to do with the vaguely discussed concept of "climate change" that some politicians are so fond of discussing, or is this a product of sunspot reduction? The timing, where sunspots disappeared in 2012 right before this cooling started, seems to imply a dimming sun is the source of this cooling.
In a mild ice age, such as the short-lived one in 1816 (which followed the Dalton Minimum of sunspot reduction in 1815), farmers repeatedly had crop-starts destroyed due to freezing and snowfall in places that were not known to have that sort of weather, or even to have temperatures dipping into the 40s during summer, and 1816 was consequently called "the year without summer". My point in bringing this up is to point out that last year in Michigan was not terribly different than this, where we almost had freezes in August. But more importantly, last year would have been merely the first year in an ice age cycle (if one is starting). 1816 involved a cold-spell and harsh winter of the sort that few Americans could really imagine nowadays, but we were already about 30 percent "there" last year, even though last year was just at the possible start of an ice age. And since more and more solar scientists are purporting that possibly the most drastic sun output decline in 10,000 years is now occurring, this makes it appear even more as if an ice age is commencing. (Who knows, this could even indicate that a full-blown ice age event is upon us, where snowfall does not melt completely in summer in places such as Michigan, southern Canada, Boston, and the like all over the world.)
It's a simple equation: if the world is cooler, with longer, harsher winters-perhaps much harsher and longer-then more snowplows are needed.
This means two things for PLOW:
1. Much of its existing customer base will transform from being a 3-6 month/year user of Douglas Dynamics' products, to a near or full year-round user-base.
2. More snowfall will have to be dealt with throughout the year since mother nature will cease to help us out in melting snow away as readily as in the past, wherein far more wear-and-tear for each individual unit (plow) sold by Douglas Dynamics (PLOW) will entail.
3. Regions that are not currently snow regions will become winter zones.
Long story short, if an ice age is on the way, PLOW, which is, I am sure, considered by many probably to be the most boring stock on the stock market, could become as hot as any. (One can imagine other stocks, such as ACAT, BGC, PKOH, TTC, and others enjoying the same fate, for their share in a lock on the snow removal industry.)
There are a few sunspots returning to the sun the past few weeks following the stark reduction in the last phase of the sun, so one might believe we are not going into an ice age (and I sure hope we are not), and it could just have been a short-lived event, as happened in 1815-1816. But we are currently in a sunspot maximum, so we are supposed to have sunspots now, but we are supposed to have a lot, not very few. In other words, solar scientists were expecting sunspots this winter, as this is the period of solar maximum, but the maximum was surprisingly wimpy-like a puff instead of a hurricane-therein baffling and alarming scientists. Consequently, the sun is dimmer, and some sort of heavy solar dimming may have started. It is early March here in Michigan, where I live,and there is more snow on the ground than I have seen even in any January in perhaps my entire life. Usually snow melts away significantly in February, but nothing even close to that happened this year, and instead we've had record cold for days in a row.
The Heavily Increased Demand for More Plows Has Already Started
Now, there is the question of whether this ice age theory is correct, but there is a second question: Let's assume the ice age theory is correct, but then how long will it be until we are in an all-out ice age scenario wherein PLOW's shares will rocket? It would seem that the harsh winter we are currently in, and what is being called the "polar vortex" (which is mostly likely a consequence of a cooled sun changing earth weather overall) would already be resulting in increased demand in Douglas's products. Regardless, we might be able to stop guessing when Douglas Dynamics (PLOW) reports next week-if it's not too early to see the harsh winter affecting Douglas's numbers.
On a related note, this second question-how long will it be until we are in an all-out ice age scenario wherein PLOW's shares will rocket?-may be misguided. If we are entering into a prolonged ice or cooling age of some sort, we would only be in the very first ice age winter, presumably far milder than those to come. But it appears that Wall Street believes this harsher winter we've undergone this year is already influencing PLOW's numbers, as seen in the way PLOW is slightly breaking out of its multi-year trading range the past few days. So, if this is only the start, demand should be explosive in, say, five years, when hypothetically speaking, Ann Arbor, Michigan, for example, could have a "year without summer", or snow does not fully melt until June in Minneapolis and returns in early to mid-August, or where snow-cover blankets Atlanta throughout winter in a way that is similar to Coldwater, Michigan. The result can only be that Douglas Dynamics will experience radically increased demand for their products.
Disclosure: I am long PLOW.