BA., BRBY, IHG, EZJ: Cyclical stocks to watch for long term

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BA., BRBY, IHG, EZJ: Cyclical stocks to watch for long term

 BA., BRBY, IHG, EZJ: Cyclical stocks to watch for long term
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Highlights

  • Cyclical stocks are the stocks of companies that get affected due to the fluctuation in the economy, which means their stock prices go up and down by business cycle fluctuation.
  • Cyclical stocks are the companies that manufacture and market discretionary items and services that are in demand when the economy expands.

Cyclical stocks are the stocks of companies that get affected due to the fluctuation in the ecCyclical stocks onomy, which means their stock prices go up and down by business cycle fluctuation. These companies enjoy high sales during the expansion period and low sales during downturns or recessions of an economy.

Cyclical stocks perform well in economic expansion whereas defensive stocks perform well in an economic downturn. 

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Generally, defensive sectors, such as consumer staples, utilities, etc. do well during the economic slowdown. Also, energy and commodity stocks perform well during rising inflationary pressure as they are the sources of input costs for companies.

Whereas cyclical stocks represent companies that manufacture and market discretionary items and services that are in demand when the economy expands. They include high-end clothing retailers, restaurants, airlines, hotel chains, Information Technology, furniture, industrial, and automobile manufacturers.

Let us look at 4 FTSE-listed cyclical stocks that you may consider investing in for the long term.

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  1. Burberry Group Plc (LON: BRBY)

Mcap: £17.96 million

One-year return: 23.53%

YTD Return: 11.94%

Burberry is a UK-based luxury fashion goods manufacturer and retailer that offers ready-to-wear fashion accessories, such as eyewear, footwear, leather goods, fragrance, and cosmetics.

The luxury fashion company hasn’t performed well as its returns over the past one year stood at -23.53%. However, the company has recently reported a 21% year-on-year increase in the revenue from £2,344 million in FY2021 to £2,826 million in FY2022. Its operating profit stood at £523 million, a 32% increase from £396 million in FY2021. The FTSE 100-listed company’s shares were trading at GBX 1,602.00, at 10:30 AM (GMT), on 20 May 2022.

  1. InterContinental Hotels Group Plc (LON: IHG)

Mcap: £8,575.16 million

One-year return: 0.54%

YTD Return: 0.63%

The British multinational hospitality company that manages hotels and brands across the world on behalf of third-party hotel owners. The company operates over 6,000 hotels and around 884,820 rooms globally.

It is one of the world’s leading hotel companies but hasn’t performed well due to covid restrictions as its return over the past one year slugged to -0.54%, while its YTD return stands at -0.63%, as of 20 May 2022.

The company has reported that its RevPAR was up by 61% in Q1 2022, as compared to Q1 2021, and announced that it has entered a new US$1.35 billion syndicated bank revolving credit facility (RCF). The FTSE 100-listed company’s shares were trading at GBX 4,751.00, up by 1.95%, at 10:30 AM (GMT), as of 20 May 2022.

Cyclical stocks are the stocks of companies that are closely related to the fluctuation in the economy

©2022 Kalkine Media®

  1. Bae Systems Plc (LON: BA.)

Mcap- £23,600.71 million

One-year return- 46.03%

YTD Return- 37.07%

The UK-based global arms, securities, and aerospace company, Bae Systems Plc, operates various segments, like the electric systems, cyber & intelligence, platforms & services, air segment, and maritime segment.

The technology-led defence, aerospace,e and security solutions provider has performed well due to the geopolitical tensions between Russia and Ukraine. It has given a positive return of 46.03% in the last one year, while its YTD return stood at 37.07%, as of 20 May 2022.

The company expects its sale to grow by 2 to 4% in FY2022, with underlying EBIT forecasted to increase by 4-6%.

The FTSE 100 listed company’s shares were trading at GBX 753.60, up by 0.78%, at 10:30 AM (GMT), as of 20 May 2022.

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  1. Easyjet Plc (LON: EZJ)

Mcap- £3,802.18 million

One-year return- -46.81%

YTD Return- -5.94%

The multinational low-cost airline group, Easyjet Plc is the seventh-largest airline in the world, with operations in 35 countries and 154 airports.

The airline group hasn’t performed well due to covid restrictions as to its returns over the last one year depreciated by -46.81%, while its YTD return stood at -5.94%, as of 20 May 2022.

The company has reported a loss before tax of £545 million in H1 2022, as compared to £557 million in H1 2021. However, its revenue stood at £1,498 million, up by 524.2% from £240 million in H1 2021.

The FTSE 250-listed company’s shares were trading at GBX 520.20, up by 3.71%, at 10:30 AM (GMT), as of 20 May 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 valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.

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