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Cyclical stock |
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Cyclical stockStock that tends to rise quickly when the economy turns up and fall quickly when the economy turns down. Examples are housing, automobiles, and paper.Cyclical stockStock in companies whose profits move in a cyclical manner, normally in phase with the economy. When the economy is prospering, so do these companies. But when the economy goes into recession, these companies feel the pain. Traditional manufacturing industries tend to be cyclical in this way.From an investor's point of view, cyclicals offer the potential for capital growth if you buy shares at the bottom of the cycle just before an upturn. But getting the timing right is difficult.Similar MatchesCountercyclical stocksCountercyclical stocksStocks whose price tends to rise when the economy is in recession or the market is bearish, and vice versa. CyclicalCyclicalCyclical stocks are those companies who earnings tend to ebb and flow with the fortunes of the economy, such as housebuilders, construction companies, and holiday companies. In prosperous times, these companies tend to do well; in recessions, they suffer. Some investors specialise in buying the shares of cyclical companies just before an upturn. |
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