10 FTSE Cyclical Stocks to Keep A Close Eye On

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Summary

• Cyclical stocks are expected to deliver huge returns during period of economic strength.
• These stocks could be highly volatile as they are affected by macroeconomic changes.
• Investors must take a prudent approach regarding their positions while timing the market.

As most of the global stock markets are making a strong comeback, driven by government backed mass inoculations programmes in the context of the Covid-19, cyclical stocks have become the most sought-after choice for smart investors. However, investors must consider the weight of cyclical stocks in their portfolio to balance the risk quotient. As we head deeper into a post-vaccine world, a strong recovery in the stock markets is expected. This could be a window of opportunity for reaping strong returns as the economy gets back into shape. 

A cyclical stock usually refers to a business which resonates with the shape of the economy. This implies that cyclical stocks might witness a dip in their performance during recession and growth during expansion of the economy. Airlines, Hospitality & Leisure, Technology, Automakers, Banks, and Manufacturing are some examples of cyclical businesses.

Investors are often enticed by the apparent predictability in the movement of these stocks’ prices. However, investors must take a prudent approach regarding their positions while timing the market. In this article, we would put our lens through some cyclical stocks that are listed on the LSE.

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Also read: 6 UK Gaming Stocks That Have Seen Highest Gains In 2020 

1. Lookers Plc (LON:LOOK)

UK-based motor retail and aftersales company Lookers Plc had topped the LSE gainers chart in the recent weeks. The company witnessed strong trading performance during the second half of 2020 driven by continued resilient trading in used cars and aftersales margins along with significant outperformance of the retail UK new car market. The company also launched 'Click and Drive' that enables contactless vehicle purchases, simultaneously improving upon its online offering and call centre capabilities.

• Price % Change (YTD 2021): 23%
• Closing price on 18 March 2021 (GBX):00
• Market Capitalisation (£, million): 83

2. Best Of The Best Plc (LON:BOTB)

UK-based competitions facilitator Best Of The Best witnessed strong trading in line with the positive outlook along with robust cash conversion rates. The company announced special dividends worth £3.75 million in February. Also, it has gained confidence in its online model, according to its recent trading update for Q3 FY 2021.

• Price % Change (YTD 2021): 44%
• Closing price on 18 March 2021 (GBX): 3,150.00
• Market Capitalisation (£, million): 295

3. Card Factory Plc (LON:CARD)

UK based greeting cards retailer; Card Factory achieved 137% growth in online sales on like-for-like basis during eleven-month period ended 31 December 2020. The company witnessed sustained growth in sales between October and November 2020.

• Price % Change (YTD 2021): 06%
• Closing price on 18 March 2021 (GBX):00
• Market Capitalisation (£, million): 50

4. Restaurant Group Plc (LON:RTN)

UK-based pub & restaurant owner Restaurant Group witnessed encouraging trading performance in Wagamama and Pubs businesses during 2020. To enhance liquidity and support growth, the group managed to raise a capital of £175 million successfully.

• Price % Change (YTD 2021): 42%
• Closing price on 18 March 2021 (GBX):00
• Market Capitalisation (£, million): 67

5. City Pub Group PLC (LON:CPC)

UK-based premium pubs operator City Pub Group is well placed to capitalise on the pent-up consumer demand and opportunities that are expected to emerge as economy gets stronger. The company expected to make a rapid return to cash generation and profitability, driven by enhanced operational efficiencies. The group has ample liquidity to survive till 2022.

• Price % Change (YTD 2021): 47%
• Closing price on 18 March 2021 (GBX):00
• Market Capitalisation (£, million): 77

6. International Consolidated Airlines Group SA (LON: IAG)

British Airways owner International Consolidated Airlines Group is all set to rule the skies after rolling out digital health passports to ensure safer travel. The move shall instil confidence among the travellers and position the airline to capitalise on the pent-up consumer demand expected to emerge this summer.

• Price % Change (YTD 2021): 10%
• Closing price on 18 March 2021 (GBX):80
• Market Capitalisation (£, million): 10,728.45

7. Fuller, Smith & Turner Plc (LON:FSTA)

As the economy is on the path to rapid recovery, the UK-listed hotel & pub chain is well poised to benefit from the release of the pent-up consumer demand and opportunities. The company shall return to cash generation after posting a loss during the first half of the 2021 in the wake of the pandemic. The company made one-fifth of the workforce redundant.

• Price % Change (YTD 2021): 01%
• Closing price on 18 March 2021 (GBX):00
• Market Capitalisation (£, million): 89

8. Surface Transforms Plc (LON:SCE)

UK-based manufacturer of carbon ceramic products for the automotive sector Surface Transforms recorded a growth of over 5 per cent in its revenue for the year ended December 2020. According to its recent trading update, the company’s revenue was recorded at £2 million (2019: £1.9 million). During the period, the company managed to secure new contracts across OEM and retrofit segments.

• Price % Change (YTD 2021): 31%
• Closing price on 18 March 2021 (GBX): 75
• Market Capitalisation (£, million): 28

9. Marston'S Plc (LON: MARS)

The LSE-listed pub and brewery owner is set to benefit from the JV with Carlsberg UK. Also, the company has taken over the reins of 156 Brain pubs in Wales in December 2020. The company is expected to reduce its debt in the short term and hop on the bandwagon of economic growth.

• Price % Change (YTD 2021): 00%
• Closing price on 18 March 2021 (GBX):85
• Market Capitalisation (£, million): 08

• Carnival Plc (LON: CCL)

FTSE 250-listed cruise operator Carnival is set to return to profitability on the backdrop of resumption of international travel. The international travel might resume in the month May as announced by the Boris Johnson government. There is a huge pent-up demand in the sector with the holiday season round the corner.

• Price % Change (YTD 2021): 01%
• Closing price on 18 March 2021 (GBX): 1,734.00
• Market Capitalisation (£, million): 3,190.56