When the economy is expanding, earnings tend to grow across the market and in such an environment, investors historically could purchase
value cyclical stocks at a much more attractive price than evergreen growth stocks.
Three examples of fairly
valued cyclical stocks would include Caterpillar Inc (CAT), Cummins Inc (CMI) and Deere & Co (DE).
Not exact matches
From our perspective,
stocks in less
cyclical sectors, such as utilities and consumer staples, generally offered much less
value and appeared to be trading at steep valuations.
One place where
value still can be found is in more
cyclical stocks.
Simon Caufield is a
value investor specialising in deep
value,
cyclical and cheap compounder
stocks in industrial and consumer discretionary sectors.
If things get too bad, then
cyclical companies can go bust, their
stocks losing all their
value.
The S&P 500 registered a record high after an advancing half - cycle since 2009 that is historically long - in - the - tooth and already exceeds the valuation peaks set at every
cyclical extreme in history but 2000 on the S&P 500 (across all
stocks, current median price / earnings, price / revenue and enterprise
value / EBITDA multiples already exceed the 2000 extreme).
Based on our fundamental analysis, we believe conditions have begun to turn more favorable for European
stocks, especially
value stocks and companies in
cyclical industries.
Recently, however,
value has proliferated beyond just a few deep
cyclical sectors; across the market, the gulf between the cheapest and most expensive
stocks within sectors has widened.
Similarly, there are a lot of
value stocks in
cyclical industries.
«That caused people to look at their portfolios and realize maybe they needed more exposure to
cyclical stocks, and that gave a lift to
value versus growth,» he said.
Due to its
value orientation, the Fund may have a higher than average exposure to
cyclical stocks.
But the damage to foreign
stocks, small - caps,
cyclicals, and
value stocks in that cycle was considerably more.
One place where
value still can be found is in more
cyclical stocks.
There are some
stocks in the
cyclical and industrial field that still can be considered
value in Europe.
If a
value stock is
cyclical, there's no mistaking it.
Cyclical stocks, for example, increase in
value when the economy is growing and decrease in
value when the economy is shrinking.