Should Investors Add These Top Cyclical Stocks To Their March 2022 Watchlist?
While the latest talks on banning Russian oil imports in the U.S. may be making headlines, investors should not overlook cyclical stocks. Namely, the cyclical areas of the stock market today would be worth noting as the economy continues to surge. Evidently, even ahead of this Thursday’s Consumer Price Index (CPI) figures, economists are already anticipating hot readings. To put things into perspective, current estimates point towards a 7.9% year-over-year increase. This would mark the CPI’s fastest growth since the 1980s. With cyclical firms often growing alongside the economy, investors could be eyeing cyclical stocks in the stock market now.
For instance, we could look at companies such as Apple (NASDAQ: AAPL) and Carnival (NYSE: CCL). By and large, both firms cater to the consumer discretionary side of the cyclical trade. On one hand, Apple would be in focus today with its upcoming launch event, its first in 2022. At the event, many are expecting the consumer tech giant to announce the latest generation of its budget iPhone SE. On the other hand, travel giants such as Carnival continue to bolster their offerings as pandemic conditions improve. As of yesterday, the company is making preparations for a full season of Alaska explorations and Canada/New England sailings. With all this in mind, could one of these cyclical stocks be worth jumping on now?
Cyclical Stocks To Buy [Or Sell] This Week
- Dicks Sporting Goods Inc. (NYSE: DKS)
- Sunrun Inc. (NASDAQ: RUN)
- United Rentals Inc. (NYSE: URI)
- Walt Disney Company (NYSE: DIS)
- Petco Health and Wellness Company Inc. (NASDAQ: WOOF)
Dick’s Sporting Goods
Let’s begin today’s list with Dick’s Sporting Goods, a cyclical company that focuses on sporting retail. The company is a leading omnichannel retailer that serves athletes and outdoor enthusiasts in more than 850 stores. This includes Dick’s Sporting Goods, Golf Galaxy, and Public Lands. Dick’s also owns and operates House of Sports as well as GameChanger, a youth sports mobile app for communications, live scorekeeping, and video streaming. Today, the company reported its fourth-quarter and full-year 2021 financials.
Diving in, the company reported full-year net sales of $12.29 billion and earnings per diluted share of $13.87. The company also ended 2021 in a strong liquidity position with cash and cash equivalents of approximately $2.6 billion. “Our exceptionally strong 2021 reflects another positive step forward in our multi-year transformational journey,” said Ed Stack, Executive Chairman. “Our strategies are driving sustainable sales and profitability growth, and we have set our business on a new trajectory. I’d like to thank all our teammates for their hard work and unwavering dedication to our business.” All things considered, is DKS stock worth investing in?
Sunrun is one of the nation’s leading home solar, energy services, and battery storage companies. In essence, it has pioneered home solar service plans to make local clean energy more accessible to everyone. The company’s innovative home battery solutions also bring more affordable and reliable solar energy. Last month, the company also reported its fourth-quarter and full-year 2021 financials.
Firstly, the company reported a 31% growth in Solar Energy Capacity Installed in 2021, exceeding guidance and also reflects the highest growth rate in five years. This is at nearly three times the operating scale. Secondly, Sunrun says that backlog growth was 57% for the full-year 2021 on strong customer order trends. Annual recurring revenue was $851 million with average contract life remaining of 17.4 years. It also reported a net earning asset of $4.6 billion, including $850 million in total cash. With that being said, is RUN stock a buy right now?
United Rentals Inc.
Following that, we have United Rentals, the world’s largest equipment rental company. The company has an integrated network of over 1,200 rental locations across North America. In fact, it operates in 49 states and every Canadian province in North America. Its over 20,000 employees serve construction and industrial customers along with utilities, municipalities, and homeowners as well. In late January, the company reported a record fourth-quarter and gave a strong 2022 outlook.
Total revenue for the quarter was $2.776 billion, which includes a rental revenue of $2.312 billion. Fleet productivity increased by 10.3% year-over-year. Also, United Rentals posted a net income of $481 million for the quarter or a GAAP diluted earnings per share of $6.61. For its 2022 outlook, the company expects total revenue from $10.56 billion to $11.05 billion, compared to $9.716 billion in 2021. For these reasons, do you think URI stock is a top cyclical stock to add to your portfolio?
Walt Disney Company
Following that, we will be taking a look at the Walt Disney Company. For one thing, most would be familiar with the entertainment goliath’s massive portfolio. This is not surprising from Disney’s timeless fairy tale classics to its massive Marvel and Star Wars IPs. For investors looking to bet on notable names in the cyclical trade today, Disney would be an interesting play. After all, the company stands to benefit from both stay-at-home and post-pandemic consumer trends. This would be thanks to its blowout Disney+ streaming platform and various Disney parks and recreation businesses respectively.
Speaking of Disney+, the company continues to adapt its streaming arm to the changing consumer landscape. Notably, Disney is planning to introduce a version of its streaming subscription that supports ads by 2023. This, of course, comes in the form of a more affordable version of Disney+ that will, ideally, cater to wider audiences. At the same time, it would also provide Disney with the chance to benefit from advertisements on the platform. As such, would DIS stock be a top cyclical stock to buy for you now?
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Petco Health and Wellness Company Inc.
Last but not least, Petco would be another name to consider in the cyclical space today. Through its “category-defining” portfolio of health and wellness offerings, the company serves pet-owners across the Americas. For a sense of scale, Petco currently operates via a network of over 1,500 retail locations across the U.S., Puerto Rico, and Mexico. Among which it also has over 150 in-store vet hospitals. If anything, consumers that picked up pets throughout the pandemic have and continue to turn to Petco now.
Accordingly, this appears to be the case judging from its fourth-quarter earnings report posted earlier today. In it, Petco raked in a total revenue of $1.5 billion alongside earnings of $0.28 per share. For reference, these figures represent sizable year-over-year gains of 13% and 154% respectively. Moreover, Petco is also expanding its pet-care paid membership plan, Vital Care. In detail, the company is introducing more benefits for dogs, a new plan tailored for cats, and numerous vet and product rebates across the board. After considering all this, will you be investing in WOOF stock?