3 Cyclical Stocks To Watch In The Stock Market Today
From geopolitical pressures to an upcoming update on the Federal Reserve’s latest take on inflation, investors have plenty to consider. Accordingly, this could see cyclical stocks come into focus in the stock market today. After all, with rising concerns regarding the Ukraine-Russia war and the Fed working to address inflation, the economy would take center stage. Later this week, Fed chairman Jerome Powell is set to testify before lawmakers. On this front, the focus could be how the war will impact the central banks’ policy strategy. This would be the case seeing as cyclical stocks often grow alongside economic cycles.
Not to mention, the economy continues to power forward across the board now. On one hand, we could look at the Commerce Department’s personal consumption expenditures (PCE) reading for January. Namely, the PCE reading is up by 5.2% year-over-year, slightly above the 5.1% Dow Jones projection. More importantly, the same report also indicates that consumer spending is up by a whopping 2.1%. To put things into perspective, this is versus estimates of 1.6%. Moreover, the job market is also seeing a similar rise. In its monthly jobs report, the Labor Department reported that non-farm payrolls jumped by 467,000 throughout January. This is well above forecasts of 125,000.
At the same time, companies in the cyclical space continue to make major plays as well. For instance, we could look at the Toronto-Dominion Bank (NYSE: TD). As of earlier today, it will be acquiring First Horizon (NYSE: FHN). Through the $13.4 billion all-cash deal, TD would be significantly expanding into the Southeastern U.S. region. By TD’s estimates, it will become a top 6 U.S. bank with $614 billion in assets upon completing the deal. As such, could one of these cyclical stocks be worth knowing in the stock market now?
Cyclical Stocks To Buy [Or Sell] this Week
Chevron is a cyclical company that focuses on its energy business. In fact, the company is one of the world’s leading integrated energy companies, providing reliable and ever-cleaner energy. The company produces crude oil and natural gas. It also manufactures lubricants, petrochemicals, and additives. Furthermore, it develops technologies to enhance its business. CVX stock has enjoyed gains of over 35% in the past year alone.
Today, the company announced a definitive agreement to acquire Renewable Energy Group’s (NASDAQ: REGI) outstanding shares in an all-cash transaction valued at $3.15 billion or $61.50 per share. The acquisition combines Renewable’s growing renewable fuels production and leading feedstock capabilities with Chevron’s large manufacturing, distribution, and commercial marketing position. The transaction will accelerate the company’s progress towards its goal to grow renewable fuel production capacity to 100,000 barrels per day by 2030. It will also help bring additional feedstock supplies and pre-treatment facilities into Chevron’s portfolio.
Last week, the company also announced that it has made a new investment in Carbon Clean, a global leader in cost-effective industrial carbon capture. “We look forward to partnering with Carbon Clean to help advance Chevron’s pursuit of lower carbon solutions,” said Chris Powers, vice president of Carbon Capture, Utilization, and Storage (CCUS) with Chevron New Energies (CNE). “Chevron has a long history of supporting innovation. We strive to apply our internal capabilities and longstanding partnership approach toward developing and commercializing breakthrough technologies, including those that enable lower carbon solutions in the marketplace.” Given all of this, is CVX stock worth adding to your portfolio right now?
Raytheon Technologies Corporation
Raytheon Technologies is a multinational aerospace and defense conglomerate. Impressively, it is one of the largest aerospace, intelligence services providers, and defense manufacturers in the world by revenue and market capitalization. Last month, the company reported its fourth-quarter and full-year 2021 financials.
Diving in, the company announced fourth-quarter sales of $17 billion. It also reported an adjusted earnings per share of $1.08. The company also exceeded its cost synergy target for the year, delivered margin expansion across its business, and returned $5.3 billion of capital to shareholders. This includes the repurchase of $2.3 billion RTX shares. Full-year 2021 sales were $64.4 billion and an adjusted earnings per share of $$.27.
For its full-year outlook for 2022, the company expects sales of $68.5 billion to $69.5 billion. It also expects to achieve an adjusted earnings per share in the range of $4.60 – $4.80. The company says that as it enters 2022, the long-term outlook for its commercial aerospace and defense markets remains strong. Its focus on aerospace and defense portfolio also positions it well to deliver sales, earnings, and free cash flow growth. On top of that, the company also says that it is poised for margin expansion across all businesses in 2022. With a steady outlook by the company, is RTX stock a top cyclical stock to invest in?
Last but not least, we will be taking a look at Etsy. In a nutshell, the company mainly caters to consumer discretionary markets via its core e-commerce platform. Through Etsy, consumers can choose from a vast library of handmade or vintage items alongside craft supplies and other miscellaneous items. Notably, the company has and continues to grow its current collection of offerings to include home décor, furniture, and toys among other categories.
By and large, most would attribute Etsy’s current operational momentum to stay-at-home trends during the pandemic. This is apparent with people turning to the company’s platform for their hobby supply needs. Just last week, Etsy reported its latest quarterly financial update. In brief, it raked in total revenue of $717 million alongside earnings of $1.11 per share. This handily tops Wall Street’s estimates of $685 million and $0.79 respectively. Additionally, the company also reports that 96.3 million active buyers at a time were on its platform throughout the quarter. This is slightly above consensus analyst forecasts of 95.6 million.
While all this is great, Etsy continues to explore new means of growing its business in a post-pandemic market. Talking about this is CEO Josh Silverman in a recent interview with Yahoo Finance last week. Silverman said that Etsy is looking to market its wares towards men. In his words, the company is “starting to advertise in channels where men are a bigger part of the viewership.” All in all, as Etsy looks to adapt its business with the shifting times, would ETSY stock be a top buy for you?