Not exact matches
Investors call them
cyclical because they
tend to move up and down in relation to
businesses cycles or other influences.
Publishing
tends to be a
cyclical business, but when you start to know that a book release is good for X sales, then you can predict what your income will look like for the next and beyond.
As for its operating companies, they
tend toward
cyclical businesses (manufacturers, retailers, a railroad) as well as finance and insurance operations.
Most
businesses tend to be
cyclical in nature, and the process of invoices is one we're all familiar with.
The low beta, or relative risk and performance to the market, will show that these stocks
tend to either perform better - or at least not as poorly - as
cyclical stocks in bad times and will usually not be most investors» focal points during the boom part of the
business cycle when investors are busy chasing technology stocks and high - growth companies.
The P / E
tends to be lower for defensive than for
cyclical stocks, throughout the turns of a
business cycle.
They
tend to outperform
cyclical stocks in hard times, but they usually are not the stocks of choice during the upswings in the
business cycle.
Consequently, their long - term earnings histories
tend to be very
cyclical because their underlying
businesses are very sensitive to economic weakness.
Please note that the high -
cyclical sectors
tend to have high correlations to
business cycle peaks and troughs.