4 Cyclical Stocks That Investors May Be Shifting Their Attention Towards Right Now
In the stock market today, inflation has constantly been on the minds of many investors. With the consumer price index rising 7% over the past year at the highest rate since 1982, there have been concerns of faster Fed rate hikes on stocks. The good news is that rising inflation does not necessarily spell the end of a bullish market. Inflation can be a headwind for the broader market, but it can also be a tailwind for some cyclical stocks.
Despite the Omicron variant continuing to spread like wildfire across the U.S, there are reasons to remain optimistic. For the most part, this could be thanks to recent comments from White House Chief Medical Advisor Dr Anthony Fauci. According to Fauci, the U.S. is approaching the ‘threshold’ of transitioning to living with the coronavirus as a manageable disease. Overall, while the Omicron variant is more transmissible, it often brings with it less severe symptoms. Hence, with the world learning to live with the virus, cyclical stocks could be appealing to some investors again.
For instance, Dish Network (NASDAQ: DISH) is in renewed talks to merge with DirecTV. Namely, a discussion between the two satellite-TV operators is being pushed by private equity firm TPG Capital. The likes of which bought a 30% stake in DirecTV from AT&T (NYSE: T) last year. Should this merger deal follow through, it would create a pay-TV operator with more than 20 million subscribers. If you think cyclicals are poised to shine this year, do you have this list of top cyclical stocks to watch in the stock market right now?
Top Cyclical Stocks To Watch Right Now
- Redfin Corporation (NASDAQ: RDFN)
- Shake Shack Inc. (NYSE: SHAK)
- JD.com Inc. (NASDAQ: JD)
- Sinclair Broadcast Group Inc. (NASDAQ: SBGI)
First up, we have Redfin, a tech-powered real estate company. In essence, the company is an online service that makes listing and shopping for a home easier. The company is one of the biggest players in the real estate space, with a presence in over 90 markets in the U.S and Canada. On top of that, the company sells and buys more than 235,000 a year. Over the past year, the real estate market has not been doing too well due to the pandemic. However, as the economy is recovering, could this be the best time to buy the dip?
Yesterday, Redfin announced that they will be acquiring Bay Equity Home Loans (BEHL), a national, full-service mortgage lender. Redfin will pay an estimate of $135 million in cash and stock to acquire the company. BEHL is a licensed mortgage lender in 42 states and employs approximately 1,200 people. For the most part, this is a strategic move on Redfin’s part to become a one-stop-shop for brokerage, lending, and other services. In theory, this should boost Redfin’s lending business. Redfin expects the acquisition to close in the second quarter of 2022. On that note, would you be keeping an eye on RDFN stock?
Next up is the burger joint Shake Shack. In short, the company operates roadside burger stands and serves burgers, hot dogs, fries, and milkshakes to name a few. The company operates over 300 Shacks, of which over 200 are domestic, company-operated Shacks. Besides that, it also has over 116 international licensed Shacks. Yesterday, SHAK stock increased by over 13% in response to the following news.
The company announced their preliminary unaudited results for the Q4 of 2021. Shake Shack reported a total revenue of over $203 million, a year-over-year increase of 29%. On an annual scale, it sees a total revenue of over $739 million, amounting to a 41.5% year-over-year increase. Furthermore, Shack sales continued to recover with Q4 same-shack sales growth of 20.8% compared to 2020. At the same time, the company also plans to open up 75 more restaurants globally in 2022, which includes adding 10 locations to its fledgling drive-thru footprint. As the company continues to expand, would you be buying SHAK stock?
JD.com is a leading Chinese e-commerce company often compared to the likes of e-commerce giant Alibaba Group (NYSE: BABA). JD.com operates as one of the largest e-commerce platforms in the Chinese market. The Beijing-based firm caters to over 550 million annual active customers with direct access to a vast range of high-quality products. On top of that, its cross-border platform also allows brands from around the world to sell directly to Chinese consumers, even if they do not have any physical presence in China. Since the start of the year, JD stock has increased by over 10%.
Earlier this week, JD.com opened two retail stores in the Netherlands that will be manned by robots preparing and delivering packages. The “robotic shops”, branded Ochama, marks the company’s first venture into Europe with brick-and-mortar locations. Ultimately, this highlights the e-commerce giant’s ambition to expand beyond China. According to JD.com, shoppers can use the Ochama app to order products ranging from food to home furnishings. Subsequently, shoppers would then go to the store to collect their orders which would be delivered to them by robots through a conveyor belt. With JD.com looking to branch out into international markets, does JD stock deserve a spot on your watchlist?
Sinclair Broadcast Group
Finishing up our list is the Sinclair Broadcast Group, a diversified media company and provider of local sports and news. The company owns or operates 294 television stations across the U.S in 89 markets. To be precise, it primarily operates in the broadcast and local sports segments. Also, the stations are affiliates of various television networks, including ABC, CBS, NBC, and Fox. Over the past month. SBGI stock has increased by more than 10%.
According to a Bloomberg report last week, Sinclair is close to securing deals to air NBA games on its new streaming service. Additionally, there would be $600 million of financing to support this expansion. If the deal takes place, Sinclair’s sports network unit, Diamond Sports group, would receive the regional digital rights to the NBA, adding to the broadcast rights Sinclair already owns. Moreover, this funding would also help Diamond to develop the new streaming app in the first half of this year. Given this news, would you be watching SBGI stock?
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