Are These The Best Cyclical Stocks To Buy After Fed Chair Jerome Powell’s Comments At Jackson Hole?

Many investors choose to invest in cyclical stocks in the stock market. In brief, these are stocks that tend to go up and down with the economy. For example, when the economy is doing well, cyclical stocks tend to do well, and when the economy is struggling, cyclical stocks tend to struggle as well.

What Are Cyclical Stocks?

By definition, cyclical stocks are companies whose businesses tend to rise and fall with the overall economy. They are often in industries that are highly sensitive to changes in consumer demand, such as housing, automobiles, luxury goods, and energy. When the economy is strong and consumers are confident, cyclical stocks tend to perform well. Notably, some of the most popular cyclical stocks in the stock market today are names such as Visa, Inc. (NYSE: V), NVIDIA Corporation (NASDAQ: NVDA), and Bank Of America Corporation (NYSE: BAC) to name a few.

However, when the economy weakens, these stocks typically underperform. For this reason, cyclical stocks are often seen as riskier than other types of investments. However, they can also offer investors the potential for higher returns during periods of economic growth. With that, here are 3 hot cyclical stocks to watch in the stock market now.

Why Cyclical Stocks?

There are a few reasons why investors might choose to invest in cyclical stocks. First, cyclical stocks tend to be cheaper during economic downturns, so investors can buy them at a discount. Second, cyclical stocks tend to rebound quickly during economic recoveries, so investors can make a quick profit. Finally, cyclical stocks can help to diversify an investment portfolio, which can reduce risk. For all these reasons, cyclical stocks can be an attractive option for many investors. If you’re keen on investing in cyclical stocks today, here are three to check out in the stock market today.

Cyclical Stocks To Watch In The Stock Market Now

VALE S.A. (VALE Stock)

Starting off the list, VALE S.A. (VALE) is the largest producer of nickel in the world. For starters, VALE S.A. has nickel operations in areas around the world. These include countries such as Brazil, Canada, and Indonesia, among others. Next, the company has fully owned and joint venture refineries in China, South Korea, Japan, the United Kingdom, and Taiwan. Currently, VA stock has a dividend yield of 5.87%.

Meanwhile, last month, VALE released its Q2 2022 financial results. Diving in, Vale notched in earnings per share of $0.88, along with revenue of $11.2 billion for the second quarter of 2022. For comparison, Wall Street’s consensus earnings estimate was $0.81 per share, along with revenue of $13.7 billion.

The company’s CEO Eduardo Bartolomeo commented in his letter to shareholders, “With the substantial reshaping of our business, such as the sale of the Midwestern System, the company is much better prepared to deliver on its production recovery agenda. We stay committed to a disciplined capital allocation and to generating and returning value to our shareholders, as further evidenced by the announcement to pay US$ 3 billion in dividends.“ Just this week, shares of VALE Stock have rebounded over 5%, and is currently trading on Friday afternoon at $13.50 per share. Considering this, is VALE stock a good addition to your watchlist today?

what are cyclical stocks (VALE Stock)
Source: TD Ameritrade TOS

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Freeport-McMoRan Inc. (FCX Stock)

Next up, Freeport-McMoRan (FCX) is one of the world’s largest producers of copper. For the uninitiated, Freeport-McMoran mines and smelters are located in North and South America, Asia, and Africa. Moreover, the company’s products are used in a wide variety of industries. In detail, this includes automotive, construction, electronics, and manufacturing.

Furthermore, in July FCX released its Q2 2022 fiscal results. Diving in, Freeport-McMoran posted weaker-than-estimated earnings for Q2. In detail, the company posted earnings per share of $0.58 on revenue of $5.4 billion. Versus, analysts’ consensus estimates for the quarter were $0.76 per share, along with revenue estimates of $6.5 billion. Additionally, FCX recorded a 5.8% decrease in revenue growth during the same period, a year prior.

FCX Chairman & CEO Richard C. Adkerson stated in his note to shareholders “FCX is in a position of strength as we navigate the current global market uncertainties. The actions we have taken in recent years to build a strong balance sheet, successfully expand low-cost operations, and maintain flexible growth options will allow us to manage the current market situation in an effective manner while preserving substantial future asset values. Despite near-term uncertainties, the long-term market fundamentals and value opportunities for our stakeholders remain extraordinarily favorable.” In addition, over the last 5 trading days, shares of FCX stock have recovered over 8%, while trading on Friday afternoon at $32.37. All in all, do you think FCX is a good cyclical stock to add to your watchlist?

FCX stock chart
Source: TD Ameritrade TOS

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Ford Motor Company (F Stock)

Rounding off the list of cyclical stocks, Ford Motor Company (F) is an American multinational automaker that has its main headquarters in Dearborn, Michigan. Ford manufactures automobiles across six continents. In addition to cars and trucks, Ford also manufactures commercial vehicles, luxury vehicles, electric vehicles, and SUVs. For a sense of scale, The Ford brand has been in existence for over 100 years, and Ford vehicles are sold in over 200 Markets around the world.

Moreover, Ford Motor announced second-quarter 2022 earnings of $0.68 per share. Also, the company posted revenue of $40.2 billion. Versus, analysts’ estimates of earnings per share of $0.43 and revenue of $34.3 billion. What’s more, Ford reported a revenue hike of 50.2% on a year-over-year basis.

Ford CEO Jim Farley commented, “We’re moving with purpose and speed into the most promising period for growth in Ford’s history – to innovate and deliver great products and connected services, raise quality, and lower costs. We’re giving customers great experiences and value, improving
our profitability and making Ford the next-generation transportation leader.
” In the last month of trading, F stock has rallied back over 23%, while still being down 28% year-to-date. All in all, does this make F stock a good buy at these price levels?

cyclical stocks (F stock)
Source: TD Ameritrade TOS

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