3 Cyclical Stocks For Your December 2021 List
As the broader stock market looks to start the week in the green, cyclical stocks appear to be taking center stage. For the most part, this would be thanks to the latest updates on the Omicron variant of the coronavirus pandemic. According to White House Chief Medical Advisor Dr. Anthony Fauci, preliminary data on the severity of the variant is “a bit encouraging”. While experts wait for more data to roll in, Fauci seems to be leaning on the positive end for now.
More importantly, what does all this have to do with cyclical stocks might you ask? Well, simply put, investors could see “encouraging” data on the pandemic front as a win for the reopening trade. Accordingly, most would argue that cyclical stocks are among the main benefactors in a reopening economy. To explain, cyclical stocks essentially consist of consumer discretionary companies and industrial firms that produce materials used in manufacturing processes. Hence, the focus on the sector of the stock market today would make sense.
Not to mention, there seems to be plenty of activity among cyclical stocks now. For starters, GCP Applied Technologies (NYSE: GCP), a construction chemical manufacturer is reportedly being acquired. As a result of the $32 billion deal, GCP stock is currently trading higher by over 15% as of 10:50 a.m. ET. If that wasn’t enough, even banking firms like Wells Fargo (NYSE: WFC) are gaining momentum. This is evident as it was named a “top pick” by analysts at Morgan Stanley (NYSE: MS). According to Morgan Stanley, the bank is likely to benefit from the Federal Reserves’ potential acceleration of interest rate hikes. Having said all that, here are three cyclical stocks to consider in the current reopening trade.
Top Cyclical Stocks To Buy [Or Sell] In December 2021
- Carnival Corporation (NYSE: CCL)
- Microsoft Corporation (NASDAQ: MSFT)
- Kohl’s Corporation (NYSE: KSS)
Right off the bat, we have the Carnival Corporation. For the uninitiated, it is among the largest leisure travel companies in the world. In essence, Carnival primarily operates via its world-leading portfolio of cruise lines. This consists of nine brands offering voyages to all seven continents at full capacity. To put things into perspective, Carnival now boasts a massive fleet of 87 ships with 16 more to be delivered through 2025. For investors looking to jump on the current momentum in cyclical stocks, CCL stock could be a go-to.
As it stands, CCL stock currently trades at $18.86 a share as of 11:54 a.m. ET. This would be after gaining by over 10% since today’s opening bell. By and large, the seemingly positive news update on the Omicron variant seems to be driving investors’ interest in the stock. While the pandemic-based tailwinds may be nice, Carnival is actively preparing for the post-pandemic return to cruising. Namely, the company will be maintaining its commission rates for travel advisors through 2023. In theory, the move could serve to strengthen its existing partnerships with third-party travel firms at a crucial time.
In summary, CEO Arnold Donald had this to say, “The Carnival Corporation family of great cruise lines stands together in our commitment to support our travel advisor partners as our industry progresses to the full return to guest service,” All in all, this seems like a solid push by Carnival ahead of the post-pandemic boom in demand for cruises. Could all this make CCL stock a top buy for you now?
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Microsoft is a multinational tech company that has a wide number of tech products and services under its belt. In fact, it is one of the largest software makers in the world with its Microsoft Windows operating system and also its Azure cloud platform which has more than 200 products and cloud services that are designed to help bring new solutions to life. MSFT stock currently trades at $322.09 as of 11:55 a.m. ET and is up by over 45% year-to-date.
Last week, the company announced that together with KPMG, they are working to explore and solve common business problems utilizing quantum-inspired optimization techniques available through Azure Quantum. Azure Quantum is the world’s first full-stack, public cloud ecosystem for quantum solutions. KPMG has built a dedicated team of professionals focused on quantum-related technologies. The two companies are educating clients on the future capabilities of quantum computing and how to apply emerging capabilities to real business problems today.
On November 2, 2021, the company also provided an insight into its plays for the metaverse. Through its Mesh for Microsoft Teams, the company aims to make collaboration in the metaverse more personal and fun. The feature combines the mixed-reality capabilities of Microsoft Mesh, which allows people in different locations to join collaborative holographic experiences, with the productivity tools of Microsoft Teams. Given this piece of news, is MSFT stock worth buying right now?
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Next up, we have Kohl’s, a department store retail chain that is also one of the largest department chain stores in the U.S. This is supported by disciplined capital management and a strong organizational culture. KSS stock currently trades at $52.09 as of 11:55 a.m. ET and is up by over 7% on today’s opening bell so far.
This comes after a report said an activist investor urged the company to sell the company or consider a spinoff of its e-commerce business. The Wall Street Journal reported that hedge fund Engine Capital wants Kohl’s to examine the two alternatives to improve its stock price. Engine Capital owns a stake of about 1% in the retailer. The Journal also reported that assuming online sales revenue of around $6.2 billion, Kohl’s digital business alone would be worth $12.4 billion, according to Engine Capital.
Last month, Kohl’s also reported its third-quarter financials. In it, total revenue for the quarter increased by 15.6% to $4.6 billion. It also reported a net income of $243 million or a diluted earnings per share of $1.65. The company also raised its full-year 2021 earnings guidance to a range of $7.10 to $7.30 per share. Kohl’s also ended the quarter with $1.9 billion in cash. As such, will you be investing in KSS stock anytime soon?