Publicly traded assets known as “cyclical stocks” exhibit share price fluctuations that correspond to the state of the economy and business cycles. Combining this with consumer spending trends has an impact on the share prices of cyclical stocks as well as the financial condition of the business itself. Cyclical stock share prices often increase during economic expansions and drop during periods of slow development.
If the timing is right, investing in cyclical stocks can provide solid returns. To be a little more specific, a cyclical stock’s potential for profitability is increased if it is bought at or near the bottom of its price range and sold when it seems to have peaked. So, as investors, it would be wise to look at stocks whose price has fallen due to recession pressure. The idea is to see renewed health in the economy, and cyclicals will frequently do better in that position than many growth firms. If you believe our economy will recover, investing in the best cyclical stocks is a good idea now, especially while there’s a bargain.
Now, let’s detail three cyclical stocks that show resilience in their performance, dividend yields, and growth potential. Economists are equally enthusiastic about these cyclical tickers:
Hasbro Inc (HAS)
Hasbro, Inc (HAS) operates as a play and entertainment company. HAS engages in the sourcing, marketing, and selling of toy and game products. These include action figures, arts and crafts products, play sets, preschool toys, and plush toys. HAS’s toy-related specialty products include apparel, publishing products, home goods, and electronics. HAS also has its hand in film, scripted and unscripted television, family programming, digital content, and live entertainment. HAS was founded in 1923 and is headquartered in Pawtucket, Rhode Island.
With 50 hedge funds owning HAS shares, it’s safe to say there’s confidence surrounding the stock’s profitability and ability to provide returns reliably. HAS is well positioned for healthy growth, and its year-over-year numbers do impress: Revenue +1.29%, Net Income +720.09%, EPS +700%,Net Profit Margin +712.72%. HAS’s earnings season has had one or two slight misses. Still, there’s an optimistic forecast for future profitability, and its current quarter currently shows us $1.9 billion in sales, with an EPS of $1.96 per share. HAS comes with a dividend yield of 3.97%, with a quarterly payout of 70 cents per share. The consensus among analysts gives HAS a median price target of 99.50, with a high estimate of 128.00 and a low of 80.00. The estimated price target is a 41.17% increase from current pricing and HAS has a robust, enthusiastic buy rating.
Advance Auto Parts Inc (AAP)
Advance Auto Parts, Inc (AAP) provides and distributes aftermarket automobile supplies to both repair shops and do-it-yourself clients. The Southern Division, Northern Division, Independents, Carquest Canada, and Worldpac are the five primary commercial segments through which AAP does business. AAP offers replacement parts, accessories, performance parts, oil and fluids, batteries, engine components, brakes, and various automotive tools and accessories. Arthur Taubman created AAP in 1929, and it is headquartered in Raleigh, North Carolina.
AAP has highly experienced management on its side and is one of the most well-regarded in its industry, currently showing $2.6 billion in sales and an EPS of $3.33 per share. Over the last five years, AAP‘s earnings have increased by 7.3% each year and are expected to increase by 12.36% per year. Analysts also predict that AAP‘s stock price will climb by 24.3%. Currently, AAP has a dividend yield of 3.58%, with a payout of $1.50 per share each quarter. And, for the last ten years, AAP’s per-share dividends have remained consistent. From analysts who provide 12-month stock price estimates, AAP has an estimated median price target of 208.00, with a high of 252.00 and a low of 132.00. This shows a 23.96% increase from AAP’s last price, and there are excellent reasons for it to be buy-rated.
Brunswick Corp (BC)
Brunswick Corp (BC) designs, manufactures and markets water-bound recreation products worldwide. BC makes engines for independent boat builders and governments through marine distributors and retailers. BC‘s Parts & Accessories division provides boat parts, engine parts, electrical products, marine electronics, and fuel systems. BC can provide customers with specialty vehicle, mobile, and aftermarket products and accessories. BC sells sport boats, cruisers, offshore boats, fiberglass fishing boats, and deck boats. Also notable is that BC shares technology with the broader marine industry. BC was founded in 1845 and is headquartered in Mettawa, Illinois.
BC is one of the more popular cyclical stocks with investors, and there are good reasons for this. It shows modest year-over-year growth, but more notably, BC has surpassed earnings forecasts for the past four consecutive fiscal quarters. Regarding ‘22 so far, Q2 had BC beating EPS and revenue by margins of 4.48% and 1.13%, respectively. And BC’s Q1 2022 report exceeded EPS and revenue by 8.71% and 1.13%, respectively. BC’s current quarter shows forecasted sales figures of $1.8 billion, with an EPS of $2.65 per share. It’s important to know that BC currently trades at around seven times its estimated annual earnings per share. BC now has a dividend yield of 2.08%, with a quarterly payout of 37 cents per share. The analysts who provide annual price target estimates have given BC a median price target of 100.00, with a high of 121.00 and a low of 85.00. This marks a jump of 42.51% over its current price, and the stock is enthusiastically buy-rated as it has a bright future ahead.
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