to be monitored over the long term
Cyclical stocks are the stocks of companies that are affected due to the fluctuation of the cyclical stock economy, meaning that their stock prices rise and fall with fluctuations in the business cycle. These companies benefit from high sales during the boom period and low sales during downturns or recessions in an economy.
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Typically, defensive sectors, such as consumer staples, utilities, etc. are doing well during the economic downturn. In addition, energy and materials stocks perform well during rising inflationary pressures as they drive up input costs for businesses.
While cyclical stocks represent companies that manufacture and market discretionary items and services that are in demand when the economy expands. They include high-end apparel retailers, restaurants, airlines, hotel chains, information technology, furniture, industrial and automotive manufacturers.
Let’s look at 4 FTSE-listed cyclical stocks you might consider investing in for the long term.
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- Burberry Group Plc (LON: BRBY)
Mcap: £17.96 million
Back on a year: 23.53%
Cumulative return since the beginning of the year: 11.94%
Burberry is a UK-based luxury fashion manufacturer and retailer that offers ready-to-wear fashion accessories, such as eyewear, footwear, leather goods, fragrances and cosmetics.
The luxury fashion company has not performed well as its returns over the past year amounted to -23.53%. However, the company recently reported a 21% year-on-year increase in revenue, from £2,344m in FY2021 to £2,826m in FY2022. Its operating profit was £523m, up 32% from £396m in financial year 2021. Shares in the FTSE 100-listed company traded at 1,602 .00 GBX, 10:30 a.m. (GMT), May 20, 2022.
- InterContinental Hotels Group Plc (LON: IHG)
Mcap: £8,575.16 million
Back on a year: 0.54%
Cumulative return since the beginning of the year: 0.63%
The British multinational hotel company that manages hotels and brands across the world on behalf of third party hotel owners. The company operates more than 6,000 hotels and approximately 884,820 rooms worldwide.
It is one of the world’s leading hotel companies, but it has not performed well due to covid restrictions as its return over the past year has dropped to -0.54%, while its return since the beginning of the year stands at -0.63%, as of May 20, 2022.
The company reported that its RevPAR increased by 61% in the first quarter of 2022, compared to the first quarter of 2021, and announced that it had entered into a new US$1.35 billion revolving bank credit facility (RCF) . Shares in the FTSE 100-listed company were trading at GBX 4,751.00, up 1.95%, as of 10:30 a.m. (GMT) on May 20, 2022.
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- Bae Systems Plc (LON: BA.)
Mcap- £23,600.71 million
Back on a year- 46.03%
Return YTD- 37.07%
The UK-based global arms, securities and aerospace company, Bae Systems Plc, operates various segments, such as power systems, cyber and intelligence, platforms and services, air segment and the maritime segment.
The defense, aerospace, and security technology solutions provider has performed well due to geopolitical tensions between Russia and Ukraine. It has given a positive return of 46.03% over the past year, while its year-to-date return stood at 37.07%, as of May 20, 2022.
The company expects sales to grow 2-4% in fiscal 2022, with underlying EBIT expected to grow 4-6%.
Shares in the FTSE 100-listed company were trading at 753.60 GBX, up 0.78%, as of 10:30 a.m. (GMT) on May 20, 2022.
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- Easyjet SA (LON: EZJ)
Mcap- £3,802.18 million
Back on a year- -46.81%
Return YTD- -5.94%
The multinational group of low-cost airlines, Easyjet Plc is the seventh largest airline in the world, with operations in 35 countries and 154 airports.
The airline group has not performed well due to covid restrictions with its yields over the past year depreciated by -46.81%, while its YTD yield stood at -5.94%, as of May 20 2022.
The company reported a pre-tax loss of £545 million in the first half of 2022, compared to £557 million in the first half of 2021. However, its revenue was £1,498 million, in up 524.2% from £240m in H1 2021.
Shares in the FTSE 250-listed company were trading at 520.20 GBX, up 3.71%, as of 10:30 a.m. (GMT) on May 20, 2022.
Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental assessment or technical analysis. Any interest in stocks or sectors should be carefully assessed taking into account the associated risks.