Are These The Best Consumer Cyclical Stocks To Buy In The Stock Market Today?

Consumer cyclical stocks have been on the rise lately in the stock market. This should not come as a surprise as this category of stocks relies heavily on the business cycle and economic conditions. It includes industries such as automotive, housing, entertainment, and retail. As the name suggests, consumer spending would dictate the performance of the company. And consumer spending is affected by economic factors such as interest rates, inflation, unemployment, and wage growth. So with the economy recovering, this puts consumer cyclical stocks back on the radar of investors.

You can see this in the stock performance of companies such as Home Depot Inc (NYSE: HD) and McDonald’s Corp (NYSE: MCD). Since March, both stocks have been on an upward trend. On one hand, HD stock has been up by over 20% within this short period. On the other hand, MCD stock has risen by over 10% as well. Hence, cyclical stocks are viewed as more volatile than non-cyclical stocks, which tend to be more stable during periods of economic weakness. However, they offer greater potential for growth because they can outperform the market during periods of economic strength. So, if this fits your investment appetite, here are four of the best consumer cyclical stocks in the stock market today. 

Top Consumer Cyclical Stocks To Watch Now

Dillard’s, Inc

To kick off the list, we have the retail giant Dillard’s. The company is a retailer of fashion apparel, cosmetics, and home furnishing. As of January 30, 2021, the company operated 282 Dillard’s stores, including 32 clearance centers, and an Internet store. The company focuses on delivering style, quality, and value to its customers from both national and exclusive brand sources.

best consumer cyclical stocks (DDS stock)
Source: TD Ameritrade TOS

When looking at the DDS stock, it is hard to argue against its excellent performance over the past year. The stock has risen over a staggering 550% during this period. In fact, the stock price rose by almost 50% just in the past week. Now let us dive deeper as to why this is happening. 

Last Friday, Dillard’s announced its first-quarter earnings. In comparison to the same quarter of the prior year, total retail sales increased by 73%. It also boasted a net income of $158.2 million compared to a net loss of $162.0 million. Finally, the company ended with cash of $616 million compared to $70 million. As vaccinations increased, stimulus money was released and warmer weather arrived. Dillard’s may see improved sales over the 2019 levels, with momentum continuing throughout the quarter. Given how impressive its financials are, would DDS stock be worth investing in?

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eBay Inc 

Next, we have the global commerce company, eBay. The company’s technology allows sellers worldwide to offer their inventory for sale virtually anytime and anywhere. eBay’s platforms are accessible through a traditional online experience, mobile devices, and its application programming interfaces (APIs). Hence, consumers could easily access its platform as long as they have access to the internet.

best consumer cyclical stocks (EBAY stock)
Source: TD Ameritrade TOS

Earlier this month, the company announced that it will be letting sellers in Canada receive payouts in U.S. dollars. Canadian sellers by invitation will be able to register for this program and choose the payout option that best suits the needs of their business. This is significant as many Canadian eBay sellers do a majority of their business on The change impacts sellers enrolled in Managed Payments.

On top of that, eBay also announced the possibility of accepting cryptocurrency as a form of payment in the future. Clearly, the company is aware of newer forms of payments and taking steps to keep up with the trend. Also, eBay will be allowing consumers to purchase non-fungible tokens (NFTs) on its broad online marketplace. This reflects an expansion of eBay’s digital collectibles business, in line with the increasing popularity of NFTs this year. With that in mind, would EBAY stock be a sound investment?

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The Children’s Place Inc

The Children’s Place is a pure-play children’s specialty apparel retailer. The company provides apparel, footwear, accessories, and other items for children. It designs, contracts to manufacture, and licenses to sell merchandise under brand names, such as The Children’s Place, Place, Baby Place, and Gymboree. PLCE stock has been on a bullish run since the start of the year. It has risen over 75% during this period and shows very little weakness. The stock got a further boost on Monday, soaring by 15.96%.

top consumer cyclical stocks (PLCE stock)
Source: TD Ameritrade TOS

The recent hike is likely due to two Wall Street firms upgrading the children’s apparel retailer ahead of its earnings report later this week. Monness Crespi Hardt analyst Jim Chartier upgraded the retailer from neutral to buy and set a $93-per-share price target on the stock.

Given much better than expected consumer spending and conservative guidance, we are raising our 1Q EPS estimate more than $1 above consensus and see the potential for more upside,” Chartier said. Meanwhile, Wedbush analyst Jen Redding also upgraded Children’s Place to an outperform rating from neutral for similarly bullish reasons. However, she sees the potential for the apparel retailer to nearly double in value. She set a price target of $150 per share. So, do you share the same sentiment as these analysts toward PLCE stock?

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Harley-Davidson Inc

Last to make the list, the infamous Harley-Davidson. It operates in two segments: the Motorcycles & Related Products (Motorcycles) and the Financial Services. As you would’ve guessed, the Motorcycles segment designs, manufactures and sells at wholesale on-road Harley-Davidson motorcycles.

consumer cyclical stocks to watch (HOG stock)
Source: TD Ameritrade TOS

On the other hand, the financial services segment provides wholesale and retail financing and insurance-related programs to Harley-Davidson dealers and their retail customers. HOG stock has more than doubled in value over the past year. In fact, it has reached a three-year high recently. Now I’m sure you would be curious as to what the driving force is.

This comes in light of the European Union’s decision to suspend a planned increase in retaliatory tariffs on its motorcycles as part of a partial trade truce with the U.S. This serves as an encouragement for the company as the tariff will not escalate from 31% to 56%. Hence, it is the first step in the right direction in favor of the company. Last week, Harley-Davidson also announced the launch of LiveWire as a standalone all-electric brand. The new brand will get its own engineering team dedicated to electric powertrains, but will also lean on Harley’s existing resources for engineering and manufacturing. All things considered, would this be a good time to buy HOG stock?

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