Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

3 Hot Cyclical Stocks To Buy Now

By (Sean Sechler )Stock MarketsMay 07, 2021 07:04AM ET
3 Hot Cyclical Stocks To Buy Now
By (Sean Sechler )   |  May 07, 2021 07:04AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

Cyclical stocks are companies that tend to perform well when the economy is trending up, which means that if you are a big believer in the ongoing recovery from the pandemic you should be very interested in this area of the market. These companies offer products and services that are in high demand when the economy is doing well but also get hit hard during economic contractions. That means a lot of these cyclical stocks were punished during the pandemic and in some cases have yet to fully recover their pre-pandemic prices.

With the U.S. Commerce Department releasing early estimates for US GDP for Q1 2021 of 6.4%, there’s a good chance the economy is well on its way towards a full rebound. It’s also possible that this is the beginning of a multi-year rally in cyclical names given all of the unprecedented activity that has taken place to stimulate the economy. Several hot cyclical stocks stand out as smart buys at this time, let’s take a look at 3 of them below.

1. Williams-Sonoma

Specialty retailers like Williams-Sonoma (NYSE:WSM) are a great example of a cyclical company that could be in for strong growth as the economy gets healthier. Combine that with trends like e-commerce growth and people spending more time at home and you have the recipe for a long-term winner. Williams-Sonoma sells high-quality home furnishings products and operates 614 retail stores under the Williams-Sonoma, Pottery Barn, West Elm, and Rejuvenation brands. What stands out about this company in the crowded retail sector is that it sells unique merchandise including high-end cookware, cutlery, home furnishings, and decorative accessories.

Williams-Sonoma reported a very strong FY 21 that saw the company almost double its EPS year-over-year and deliver record sales growth. The company also saw e-commerce revenues account for 70% of the company’s $6.8 billion in sales, which tells us that it has effectively developed this important sales channel. With brands that appeal to younger generations like Millennials who are buying homes for the first time and lofty ambitions to reach $10 billion in revenue in the next 5 years, investors should be confident in this company’s vision and its proven track record with building successful brands.

2. Honeywell

This diversified industrial conglomerate is a great cyclical stock for a variety of reasons. First, Honeywell (NYSE:HON) is a leading blue-chip industrial company that has a history of growing its dividends over the years. That tells us that Honeywell is a well-managed company that has been able to successfully deal with the ups and downs of the economy over the years. Additionally, many of the company’s end markets including aerospace, process automation, and industrial materials should see sharp rebounds as the global economy recovers from the impacts of the pandemic.

Honeywell recently beat earnings estimates and exceeded its own guidance, but it’s worth mentioning that the company is still dealing with an ongoing recovery in some of the areas of the business that were hit hardest by the pandemic. Specifically, the commercial airline industry has been a major drag on earnings and resulted in a 22% year-over-year decline in the company’s aerospace sales in Q1. With that said, Honeywell raised its full-year sales and adjusted EPS guidance and should see even better results as the year goes on, especially as the aviation industry bounces back. The bottom line here is that Honeywell is a great cyclical stock to own given the company’s strong balance sheet and potential to outperform in 2021.

3. Weyerhaeuser

In case you haven’t noticed, the price of lumber is consistently hitting record highs thanks to huge demand in the housing market. It’s up over 280% since the start of the pandemic and builders are scrambling for supply. That’s a big reason to consider adding shares of this hot cyclical stock, Weyerhaeuser (NYSE:WY). It’s one of the world’s largest integrated forest products companies that is primarily involved in growing and harvesting timber. The company also produces, distributes, and sells wood and paper products.

As the largest private owner of timberlands in the U.S. and a company with very solid fundamentals, this REIT is a great way to take advantage of the lumber shortage. Keep in mind that the global demand for lumber will likely be extremely high for the remainder of the year, which will keep prices inflated and benefit this company’s earnings in a big way. When you account for the fact that Weyerhaeuser stock also offers a 1.76% dividend yield and has rallied 17% year-to-date, it's even easier to have conviction in adding shares. This is a cyclical stock that is a clear buy for as long as the housing boom lasts.

Original Post

3 Hot Cyclical Stocks To Buy Now

Related Articles

3 Hot Cyclical Stocks To Buy Now

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email