Rising discretionary spending amid a fast-paced economic recovery is helping consumer cyclical companies thrive. And, because the demand for discretionary items is expected to remain high with the economy tracking upwards, Goldman Sachs (NYSE:GS) recently upgraded consumer cyclical stocks Magna (MGA) and Lear (NYSE:LEA) to ‘Buy.’ So, read on to learn more.Shares of consumer cyclical companies have been performing well this year because an improving job market is driving an increase in consumers’ discretionary spending. The Federal Reserve’s loose monetary policy is also driving the growth of consumer cyclical companies.
Among other cyclical industries, automotive is seeing rising demand based on people’s improved ability to afford automobiles with employment levels improving. While the industry has been suffering from lowered production due to a global semiconductor chip shortage, increasing government and private investments to address the shortage should help automotive companies generate solid growth in the coming quarters.
Given this backdrop, Goldman Sachs has recently upgraded auto parts companies Magna International , Inc. (NYSE:MGA) and Lear Corporation (LEA) to ‘Buy.’ And we think these companies’ potential to capitalize on the industry's tailwinds makes them ideal investment bets now.