Cyclical industry refers to a sector that is highly sensitive to business cycles and economic fluctuations. These industries include sectors such as consumer discretionary, energy, materials, and industrials. The performance of cyclical industries is closely tied to the overall health of the economy, with periods of expansion generally leading to increased demand for their goods and services, while economic downturns can result in decreased demand and revenue.
Cyclical stocks are stocks of companies that operate in cyclical industries. The stocks of these companies are highly correlated with the overall economic cycle and can experience significant volatility in response to changes in economic conditions. Investors in cyclical stocks often look for opportunities to buy when the industry is experiencing a downturn, with the expectation that the stock will increase in value when the economy improves and demand for the industry’s goods and services rebounds.
Investing in cyclical stocks can be risky due to their sensitivity to economic conditions, but it can also be rewarding for investors who are able to correctly time their investments. To successfully invest in cyclical stocks, it’s important to have a thorough understanding of the industry’s business cycles and economic indicators, as well as the individual company’s financial health and market position. Considering this, let’s look at three top cyclical stocks to watch in the stock market today.
Cyclical Stocks To Buy [Or Avoid] Now
- Delta Air Lines Inc. (NYSE: DAL)
- Starbucks Corporation (NASDAQ: SBUX)
- Booking Holdings Inc. (NASDAQ: BKNG)
Delta Air Lines (DAL Stock)
Leading off, Delta Air Lines Inc. (DAL) is a major airline that operates both domestically and internationally. As a cyclical company, its revenue is sensitive to changes in the economy and consumer behavior.
Back in January, Delta reported its fourth quarter 2022 financial results. In detail, the company announced earnings of $1.48 per share, on revenue of $13.4 billion. This is in comparison with consensus estimates that were $1.31 per share, along with revenue of $12.4 billion. Additionally, revenue increased by 41.9% versus the same period the previous year.
Year-to-date, shares of DAL stock are up 3.16% so far. While, during Wednesday’s mid-morning trading session, shares of DAL stock are down by 0.74% at $33.64 a share.
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Starbucks (SBUX Stock)
Next, Starbucks (SBUX) is a well-known global restaurant brand with a presence in over 80 countries and nearly 36,000 stores as of the end of fiscal 2022. The company operates in three main segments: North America, international markets, and channel development, which includes grocery and ready-to-drink beverages.
Last month, Starbucks reported its first quarter 2023 earnings results. Specifically, the company released earnings of $0.75 per share, with revenue of $8.7 billion. For context, this is versus Wall Street’s consensus estimates which were earnings of $0.77 per share, and revenue estimates of $8.8 billion. In addition, revenue increased by 8.2% versus the same period, the prior year.
During the last month of trading, shares of SBUX stock are down by 3.76%. Additionally, on Wednesday, Starbucks stock is trading up on the day so far by 0.29% at $100.83 per share.
Booking Holdings (BKNG)
Last but not least, Booking Holdings Inc. (BKNG) is a leading online travel agency that generates the highest revenue in the world. The company provides a platform that allows customers to make reservations and payments for various travel-related services, including hotels, alternative accommodation rooms, airline tickets, rental cars, restaurant reservations, cruises, experiences, and other vacation packages.
Last month, Booking Holdings announced better-than-expected earnings results for Q4 2022. In detail, the company reported earnings of $24.74 per share, along with revenue of $4.0 billion. For context, this is compared to analysts’ consensus estimates were earnings of $20.97 per share, and revenue estimates of $3.8 billion. Moreover, revenue increased by 35.8% in comparison to the same period, the prior year.
In 2023 so far, shares of BKNG stock have advanced by 26.50%. Meanwhile, during Wednesday’s mid-morning trading session shares are flat on the day at $2,570.78 a share.
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