Cyclical stock

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Cyclical stock

Stock that tends to rise quickly when the economy turns up and fall quickly when the economy turns down. Examples are housing, automobiles, and paper.

Cyclical Stock

Stocks that tend to do poorly when most of the economy as a whole is performing poorly and vice versa. Cyclical stocks may represent publicly-traded companies that are perceived to be luxuries or that sell expensive products. For example, car companies sell expensive products (cars) that many people perceive to be necessities. However, because they are expensive, consumers in bad economic times may decide to wait to buy cars until the economy improves. On the other hand, car companies tend to do rather well when the economy is doing well.

cyclical stock

Common stock of a firm whose profits are heavily influenced by cyclic changes in general economic activity. As investors anticipate changes in profits, cyclical stocks often reach their high and low levels before the respective highs and lows in the economy. Compare countercyclical stock.
When should I invest in cyclical stocks?

With the proper crystal ball, you should buy cyclical stocks six months before the earnings in the target group begin to move up, and sell the group six months before the earnings turn down. Note: Most crystal balls are cloudy!

Steven Flagg, Senior Vice President—Investments, UBS PaineWebber, Mount Kisco, NY

Cyclical stock.

Cyclical stocks tend to rise in value during an upturn in the economy and fall during a downturn. They usually include stock in industries that flourish in good times, including airlines, automobiles, and travel and leisure.

In contrast, stock in industries that provide necessities such as food, electricity, gas, and healthcare products tend to be more price-stable, as do companies that provide services that reduce the expenses of other companies. Those stocks are sometimes called countercyclicals.

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Paris-based Carmignac, which has e1/449 billion in assets under management, earlier this month set up a "short-selling" basket of cyclical stocks to benefit from the stock market pull-back.
Overall we hold the view that volatility bouts represent buy opportunities for equities and especially for cyclical stocks, which are oversold, and in particular for European banks.
We saw opportunities in domestic cyclicals and reduced exposure to metals and global cyclical stocks," he says.
For instance, when the markets were down in June-August 2013, the fund saw an opportunity in domestic cyclical stocks and bought construction and mid-cap cement companies, besides mid-cap banks.
In our view, cyclical stocks will keep on performing on speculation the economy has bottomed," Vaibhav Sanghavi, managing director of Ambit Investment Advisors, said in an e-mail interview.
LONDON, Jumada I 11, 1435, Mar 12, 2014, SPA -- European shares fell on Wednesday, with cyclical stocks retreating on concerns over Chinese growth, persistent tensions in Ukraine and below-forecast earnings reports, Reuters reported.
So-called cyclical stocks in the basic materials, financial and energy sectors, which tend to rise with optimism over the economy, combined to add 34 points to the index.
In terms of sectors, the more cyclical stocks are preferred because at present the movement is from a liquidity-driven bull market to a growth-driven bull market.
This is an opportunity to buy cyclical stocks even though I do expect some sort of a contained pull-back this year and volatility may pick up," Mark Harris, who helps oversee about $1.
European cyclical stocks bore the brunt of the wider market sell-off as persistent concerns that an improving economic outlook in the United States would prompt the country's central bank to start reducing its ample liquidity support prompted investors to retreat on the last trading day of the month.
Other cyclical stocks, such as miners, were also out of favour and ENRC was the FTSE 100's largest faller, down more than 7%.
Cyclical stocks such as miners, banks and energy companies led the FTSE 100 index lower, with Barclays, Evraz, and ENRC among the worst performers, down 2.