Here Are 3 Cyclical Stocks For Your Watchlist This Week
For investors wondering why the stock market is up today, cyclical stocks could be the reason. Today, a consumer sentiment survey held by the University of Michigan has concluded that the expectations of inflation have eased slightly. This could potentially put cyclical stocks in a somewhat better position, making them more appealing to investors today. Furthermore, with rising interest rates and inflation, the market has been on a sell-off in the last few months. Hence, cyclical stocks could be trading at more attractive valuations right now.
Take Li Auto (NASDAQ: LI) for instance. On June 21, the Chinese electric vehicle maker revealed the Li L9. This would be the company’s flagship full-size, six-seater smart SUV. Powering the company’s latest offering are two of Nvidia’s (NASDAQ: NVDA) NVIDIA DRIVE Orin systems-on-a-chip (SoCs). With these SoCs, the L9’s in-built compute platform operates at industry-leading efficiency. Since then, reservations have been made available, and it has reached a record order of more than 30,000.
Another cyclical stock worth mentioning is FedEx (NYSE: FDX). Notably, this would be thanks to the company’s earnings update. After yesterday’s closing bell, the company posted overall solid figures. This includes an earnings per share of $6.87 for the quarter. To compare, this would be just above the consensus figure on Wall Street of $6.86. All in all, it seems that cyclical stocks continue to bring more to the table even amidst these turbulent times for the economy. On that note, could one of these three cyclical stocks in the stock market be your next big investment?
Cyclical Stocks To Watch Today
First and foremost, we have a software development company Zendesk. In a nutshell, the company offers web-based help desk software as well as a customer support platform. Its flagship product is Zendesk Support, a system for tracking, prioritizing, and resolving customer support tickets across several channels. Zendesk Chat, a live chat, and messaging platform, is also an offering by the company to engage with consumers on websites and mobile device applications. ZEN stock is currently up over 25% on today’s opening bell.
The reason for today’s jump in trading is that Zendesk has agreed to be acquired by an investor group. This deal, led by Permira and Hellman & Friedman, will give shareholders $77.50 per share, a premium of about 34% over the company’s closing stock price Thursday, according to the release. In total, this all-cash transaction is valued at around $10.2 billion.
The company’s board unanimously approved the deal, which it expects to close in the fourth quarter of the year. This comes after the board had conducted an extensive strategic review over a three-month period. The company says that, with Hellman & Friedman and Permira’s support, it will continue to execute on its long-term strategy with its customers as its top priority. Given this piece of information, is ZEN stock worth looking out for right now?
Another cyclical company to consider now would be Wolfspeed. In brief, the company specializes in developing wide bandgap semiconductors. Among the key components of these semiconductors are silicon carbide (SC) and gallium nitride (GaN) tech. Both of which, according to Wolfspeed, make for highly energy-efficient and sustainable semiconductors. Through its offerings, the company services a variety of booming end markets. This includes the electric vehicle (EV), 5G, renewable energy, aerospace, and defense industries. With the ongoing global chip shortages, WOLF stock could be appealing to investors now.
Wolfspeed received an analyst upgrade from Goldman Sachs (NYSE: GS) to a Buy rating from a Neutral rating. It says that the semiconductor company’s risk-reward profile now looks more attractive given the recent pullback and that a significant upward earnings inflection is up ahead. This also followed another upgrade from Oppenheimer in mid-June. Oppenheimer analyst Colin Rusch upgraded the company to an Outperform rating and placed a price target of $105 on Wolfspeed.
Last month, the company also announced that it will supply its EV2flex line of charging infrastructure products with SC MOSFETs to Rhombus Energy Solutions. The products will offer greater efficiency, higher power density, and faster charging times. “Wolfspeed has unequivocally demonstrated the high value of their Silicon Carbide MOSFETs and we are pleased to partner on advanced technology products,” said Deanne Davidson, senior vice president and general manager of Rhombus Energy Solutions. “As Rhombus continues to be the leading provider for V2G charging systems, Wolfspeed’s Silicon Carbide MOSFETs are a critical component for Rhombus to meet the demands in the growing DC fast-charging market for EVs.” Given all of this, should investors consider investing in WOLF stock?
Last but not least, we will be taking a look at the Microsoft Corporation. On the whole, most would be familiar with this tech goliath and its vast array of offerings. From Microsoft’s broad selection of productivity and enterprise software solutions to its home computing offerings, this is apparent. With countless organizations relying on Microsoft’s services, some would argue that its place in the cyclical space remains as relevant as ever. Even now, as the broader stock market attempts a recovery, investors across the board would be eyeing MSFT stock.
For one thing, this seems to be the case with analysts over at Citigroup (NYSE: C) The likes of which are now naming MSFT stock a “Top Pick”. Moreover, the firm now has a price target of $364 on the tech giant’s shares. According to Citi, this is due to the recent volatility in markets leading to the current selloff in software firms “coming to an end soon.” Following such a rosy update from Citi, tech investors could be keen to jump on the company’s shares today.
Not to mention, Microsoft remains hard at work expanding its operations across numerous fields as well. To begin with, the company revealed a new sales experience application just last week. This would be its Viva Sales solution. According to Microsoft, it serves to enrich CRM systems with customer engagement data from Microsoft 365 and Microsoft Teams. Secondly, as of earlier this week, Microsoft is now part of the Metaverse Standards Forum. Through this, the company alongside Unity (NYSE: U), Meta (NASDAQ: META), and other metaverse-immersed firms can share ideas on the emerging tech field. With all this in mind, would you consider MSFT stock a top buy in the stock market today?