Best Stocks To Invest In 2021? 3 Cyclical Stocks To Watch

25, 2021

6 min read

This story originally appeared on StockMarket

3 Cyclical Stocks To Consider Buying In The Stock Market This Week

As investors rotate from growth stocks towards reopening plays, cyclical stocks continue to gain momentum in the stock market today. After all, high growth tech stocks have mostly been trading sideways this year on account of inflation fears among other factors. Particularly, blockchain stocks have now become some of the most volatile stocks in the market as Bitcoin faces regulatory challenges in China. Given the increased uncertainty for tech investors now, cyclicals could possibly offer some security. Understandably, companies in the cyclical space would stand to benefit the most from an economic upswing. With the current trajectory of the economy, I can understand if investors are now turning towards the top cyclical stocks today.

In fact, analysts from JPMorgan (NYSE: JPM) recently mentioned in a research note that cyclicals continue to outperform the market across the board. To begin with, companies working in the industrial sector such as John Deere (NYSE: DE) are on the uptrend. DE stock is currently looking at gains of over 130% in the past year. Meanwhile, consumer-focused companies such as L Brands (NYSE: LB) and Tesla (NASDAQ: TSLA) would also be in focus. This could be the case as consumers would generally have more discretionary funds available post-pandemic. Even now, both LB stock and TSLA stock have more than tripled in value over the past year.

Now, all this is great for top cyclical stocks and investors. However, could the rising threat of inflation see this sector lose steam? According to JPMorgan equity strategist Dubravko Lakos-Bujas, likely not. The strategist argues that institutional investors are well aware of inflation risks and have already priced in potential downsides. Nevertheless, if all this has you keen on adding some cyclical stocks to your watchlist, here are three making headlines in the stock market now.

Top Cyclical Stocks To Watch This Week

Carnival Corporation

Carnival is a cruise operator and one of the world’s largest travel leisure companies. The company has a wide portfolio of global cruise lines which include Costa Cruise and AIDA Cruise. Together, the company has a fleet of 87 ships visiting over 700 ports around the world and totaling 223,000 lower berths. Carnival also has plans to add 16 new ships through 2025. Pre-pandemic, its brand would host nearly 13 million guests annually, accounting for nearly half of the overall global cruise market. CCL stock currently trades at $27.90 as of Monday’s closing bell and is up by over 30% year-to-date.

cyclical stocks (CCL stock)
Source: TD Ameritrade TOS

Yesterday, the company announced that its AIDA Cruises has successfully started into the cruise season in the Eastern Mediterranean with AIDAblu. AIDAblu is the second ship of the Costa Group to resume operation with an itinerary touching Greece after Costa Cruises’ return with Costa Luminosa, which restarted on May 16 from Italy to bring guests to visit Corfu, Athens, Mykonos, and Katakolon and will be followed by Costa Deliziosa at the end of June. Given how the cruise industry continues to receive pent-up demand due to the pandemic that essentially grounded the industry last year, Carnival could be well-positioned for growth this year.

The company’s reopening plays have been impressive so far. In the month of May itself, the company also announced that its Princess Cruises plans to resume cruising in the U.S. with Alaska Sailings departing Seattle in July 2021. Seeing how the vaccination rollout will play a crucial role in Carnival’s reopening for business, the company has also been actively vaccinating its crew members to ensure that they are safe. All things considered, will you add CCL stock to your watchlist?

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United Parcel Services Inc.

UPS is a multinational shipping & receiving and supply chain management company. It is one of the world’s largest package delivery companies and it provides a broad range of integrated logistics solutions for customers in more than 220 countries and territories. The company boasts more than 540,000 employees. UPS stock currently trades at $213.43 as of 4:00 p.m. ET Monday and has more than doubled in the last year.

top cyclical stocks to watch (UPS stock)
Source: TD Ameritrade TOS

Last month, the company announced its first-quarter financials for fiscal 2021. Consolidated revenue for the quarter increased by 27% and it enjoyed growth across all segments. Its consolidated average daily volume increased by 14.3% year-over-year as well. This is a given as more people relied on UPS’ services throughout the pandemic and still do today. The company also reported that its adjusted diluted earnings per share were up by 141% to $2.77. It also reaffirmed its full-year 2021 capital allocation plans with capital expenditure planned to be about $4 billion.

I want to thank all UPSers for delivering what matters, including COVID-19 vaccines,” said Carol Tomé, UPS chief executive officer. “During the quarter, we continued to execute our strategy under the better not bigger framework, which enabled us to win the best opportunities in the market and drove record financial results.” Earlier in the month, the company also announced a quarterly dividend of $1.02 per share on all outstanding Class A and Class B shares. With that in mind, is UPS stock worth watching?

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Walt Disney Company

Another top name in the cyclical space now would be the Walt Disney Company. Chances are, most people would be familiar with the company’s work in the entertainment industry. More importantly, Disney makes the most of its countless IPs in a variety of ways. Given its gargantuan media and tourism-related portfolio, you could say that Disney is firing on all cylinders now. 

best cyclical stocks (DIS stock)
Source: TD Ameritrade TOS

On one hand, the company is in a favorable position in the content streaming industry now. Evidently, its Disney+ streaming platform is currently gaining subscribers at breakneck speeds. This would likely continue as general cord-cutting trends persist. On the other hand, Disney’s tourism portfolio would receive a breath of fresh air as travel restrictions loosen. Could all this leave DIS stock with more room to grow this year?

For the most part, CNBC’s Jim Cramer appears to believe so, arguing that DIS stock’s current price does not reflect its potential. On that note, Disney does not seem to be slowing down in the slightest. While aggressively pushing content on the streaming front, the company continues to bolster its leisure offerings. This week, tickets for its top-of-the-line cruise, Disney Wish, will be going live.

On top of that, the company is planning to add Spider-Man-related activities for Disneyland Resort guests later in June. Would you say that all this makes DIS stock a top cyclical stock to watch right now?

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