Cyclical stocks are stocks whose performance is positively correlated with the economic cycle. In fact, most industries are hardly immune to economic cycles.
The industries with a high degree of cyclicality mainly include:
1. Bulk raw materials industry: iron and steel, non-ferrous metals, chemicals and so on. Bulk raw materials are the basis of the industry, its prices and related corporate profits are also highly correlated with the economic week.
2, building materials industry: cement, etc.. This is related to changes in construction demand in the economic cycle.
3, capital-intensive areas: construction machinery, machine tools, heavy trucks, equipment manufacturing and so on.
4, non-essential consumption areas: automobiles, high-end liquor, high-end clothing, luxury goods, airlines, hotels and so on. The performance of this type of industry is affected by people's income and has a high correlation with the economic cycle.
When the economic cycle is in an expansionary phase, the advantage of choosing cyclical stocks is greater. If it's not in an expansionary phase, investors can also look at it from a foothold with defensive and growth sectors.
Cyclical sectors include: planting and forestry, farming, processing of agricultural products, iron and steel, new materials, construction materials, general equipment, chemical products, chemical synthetic materials, new chemical materials, agricultural services, coal mining and processing, oil mining, electronics manufacturing, automobiles, computer equipment, communications equipment, transportation equipment services.
Cyclical sectors can be divided into defensive non-cyclical sectors (such as planting and forestry, computer equipment, farming, etc.) and strong cyclical sectors (such as transportation equipment, steel, oil mining, etc.). Cyclical sectors are collections of stocks in industries that are cyclical in nature.
The main stocks in the cyclical sector are: Tianshun Wind Energy (002531), Follett (601865), Zhengtai Electric (601877), Liangxin Electric (002706), stock (002706), Dongfang Sunrise (300118), Tongwei shares (600438), Pinggao Electric (600312), Guohai Securities (000750) ), Guanghui Automobile (600297), Lexin Technology (688018) and so on.
The stock market itself is cyclical. There are no stocks that only go up and not down, and there are no stocks that only go down and not up. Most of the stocks in the industries published by the Stock Exchange belong to the cyclical sector, but the cyclical strength varies.
What are the sectors of cyclical stocks to understand, the following is the difference between cyclical stocks and growth stocks:
The main differences between growth stocks and cyclical stocks are: different changes in stock prices, different dividend distributions, different industries, and different investor preferences.
Growth stocks are mainly stocks issued by companies in the rapid development stage. Generally speaking, these companies belong to new materials, new energy and other emerging industries with great development potential. At the early stage of development, the stock yield is low and the stock price is low; the profit of growth stock companies reaches a new peak in the upturn of each economic cycle, which is higher every time; the capital profit of the company is generally used to build up the warehouse, increase scientific research and other production activities to expand the scale of production, and usually distributes less dividends; growth stocks are suitable for long term investors, who get huge investment profit from the long term stock price rise.
Cyclical stocks generally belong to non-ferrous metals, steel, chemicals and other basic bulk raw materials industry, with the ups and downs of the economic cycle fluctuations. When the economy grows at a high rate, these industries increase the market demand for their products, stimulating the stock price to rise. When the economic downturn, these industries reduce the demand for products, the share price fell accordingly; period shares generally higher dividends, more speculative stocks, by short-term investors favorite.