3 Hot Cyclical Stocks For Your November 2021 Watch List
As the dust settles on this exciting week in the stock market, investors could be taking a look at cyclical stocks now. For the most part, this could be the case given the signs pointing towards a rapidly rebounding economy. Sure, the road to recovery for the economy has not been the smoothest one. Even so, investors seem to be digesting the latest info on the economy seeing as the broader market ended Thursday mostly mixed.
For some context, the Consumer Price Index (CPI) saw a 6.2% year-over-year rise in October, its largest increase since December 1990. With this being compared to estimates of 5.9%, investors were understandably spooked at first. However, it is also important to note the Labor Department’s latest weekly jobless claims update as well. Namely, jobless claims fell to a new pandemic era low last week. In theory, some would argue that these metrics show the overall positive trajectory of the economy now. As such, cyclical stocks, that follow economic cycles closely, could be in focus in the stock market today.
If anything, consumer markets, a key cyclical sector, are thriving as well. Just yesterday, luxury fashion firm Tapestry (NYSE: TPR) reported solid figures in its latest quarterly earnings. In detail, the company posted an earnings per share of 82 cents on revenue of $1.43 billion. This handily exceeded consensus estimates of 70 cents and $1.43 billion. At the same time, we are also seeing similar trends in international markets. Alibaba (NYSE: BABA) reportedly raked in a total of $84.5 billion in sales throughout its Singles Day sales yesterday. This smashed its 2020 figures of $74 billion. Aside from these two instances, cyclicals continue to turn heads across the board.
Best Cyclical Stocks To Invest In [Or Sell] Now
- Carnival Corporation (NYSE: CCL)
- Lucid Motors Company (NASDAQ: LCID)
- Taiwan Semiconductor Manufacturing Company (NYSE: TSM)
First up, we have the Carnival Corporation. In brief, it is among the largest leisure travel firms globally. Carnival primarily operates via its industry-leading portfolio of cruise line brands. The likes of which include its Princess Cruises, Seabourn, P&O Cruises, and Cunard brands. For a sense of scale, Carnival’s global fleet currently consists of 87 vessels, offering voyages to over 700 ports worldwide. Should investors be keen to invest in the current reopening trade, CCL stock could be a go-to.
Even now, CCL stock is already sitting on year-to-date gains of over 54%. Despite its current momentum, Carnival does not seem to be dropping its anchors anytime soon. Yesterday, the company provided two key updates on its current operations. For starters, Carnival revealed that its third premium Excel-class ship, the Carnival Jubilee, will be delivered in 2023. This would be among the 16 new ships on schedule to join its fleet through 2025. Carnival President Christine Duffy said, “This beautiful, innovative ship will bring an entirely new cruise experience to our guests, and we’ve got some great surprises to fun it up in ways we know they are going to love.“
Notably, this news comes alongside mention of Carnival’s restarting plans. According to the company, its entire U.S.-based fleet will be back in action by March 2022. 19 of these ships have already been confirmed to return by February 2022. As Carnival looks toward the return of commercial cruising, will you be watching CCL stock?
Following that is Lucid Group, an upcoming name in the electric vehicle (EV) scene today. Since going public via a SPAC deal back in July, the company has and continues to turn heads. To begin with, its EV offerings are reportedly capable of keeping up with some of the biggest names in the industry. Among the notable comparable points would be Lucid’s single charge battery range of 520 miles. This would put it well above Tesla’s (NASDAQ: TSLA) longest range EV by over 100 miles.
In fact, LCID stock is currently up by over 90% in the past month alone. From the get-go, investor optimism around newcomers such as Rivian (NASDAQ: RIVN) appears to be boosting EV stocks. Regardless, LCID stock seems to be attracting attention from analysts as well. Earlier this week, Bank of America (NYSE: BAC) doubled its price target for LCID stock from $30 to $60. According to BAC analyst John Murphy, “a 10% dilutive equity raise could fund three-plus incremental plants and 750,000-plus incremental units of capacity, which would make LCID a relatively large global luxury automaker.”
By and large, while Lucid’s tech is impressive, it still has a ways to go before directly competing with the top guns. Nonetheless, deliveries for its earliest customers are already well underway at the moment. Arguably, this alongside the recent legislative win for EV infrastructure in the U.S. could provide LCID stock with more room to run in the long run. Would you agree?
Taiwan Semiconductor Manufacturing Company
Another firm to consider among cyclical stocks now would be the Taiwan Semiconductor Manufacturing Company or TSM for short. As the largest manufacturer of semiconductor chips in the world, TSM would stand to benefit from booming economies globally. After all, its chips are tech components in a massive array of industries across the board. This includes the consumer tech industry. Whether it be smartphones, gaming devices, or even automobiles, semiconductors are present.
All in all, TSM remains a core player in overcoming the global semiconductor chip shortage now. As you can imagine, demand for its offerings continues to skyrocket. So much so that it is actively working with tech companies to meet said demands. As of this week, the company is teaming up with Sony (NYSE: SONY) to bolster its chip manufacturing capacity. In essence, the duo are now building a $7 billion chip plant in Japan with support from the Japanese government.
According to TSM, construction of the plant is set to commence in 2022 with production beginning in 2024. While this is great, it is but a fraction of TSM’s plans to invest $100 billion towards expanding its production capabilities through 2024. With that in mind, will you be adding TSM stock to your portfolio for the long run?