How to invest in cyclical stocks and what are cyclical stocks?

Cyclical ** personality is distinct, the company's performance will have obvious peaks and troughs, the stability of long-term operation is slightly worse, when the economy is booming, it may make a lot of money, and when the economy is sluggish, it may turn bankrupt. It is precisely this characteristic that makes it possible for periodicity to breed "several times".

First of all, strictly control the best time. The timing of investing in cyclical companies is very important, investing in the industry when it is at a low point and exiting during the boom period. The grasp of the industry cycle must be based on a sufficient understanding of the industry, which requires investors to track and study the industry for a long time.

One point in time is that if almost all companies in the industry are losing money, a group of companies have the possibility of bankruptcy, and one or two companies really go bankrupt, then the stock prices of companies in the industry must be at a relatively extreme low; Another point in time is when the company's performance improves and the products and services are excellent under the premise that there is no large excess of capacity supply.

Second, don't buy companies that could go bankrupt. Which companies are at risk of going bankrupt?

Generally, when it comes to the trough of cyclical industries, most companies in the industry are loss-making, and they can only rely on cash to survive the winter and wait for the arrival of spring. The statement will naturally not look good, in which the debt ratio is too high, the operating cash flow has been negative for a long time and there is no trend of improvement, and the company that can not cover the short-term liabilities by selling assets must be more careful.

You can consult industry insiders, or check industry information, to see what abnormal performance of bankrupt companies in the past before bankruptcy. Of course, in industries where state-owned capital is involved, ordinary investors can also enjoy the protection of the great motherland. Specific to A-shares, that is, all state-owned companies with the prefix "China" will definitely not go bankrupt.

To avoid landmines, the next step is to determine the specifics. Which ** have fully benefited from the industry's cycle from trough to trough? Historically, one is that companies that rank lower in the middle of the industry, have a skewed financial position, but are better than the worst companies, and are close to bankruptcy but not bankrupt.

Such companies have the greatest stock price elasticity, and the stock price will even rise more than 10 times from low to high. But investing in such a company is very risky, and if the winter is a little longer, the company will go bankrupt and lose all its money. If you want to get excess returns, you can allocate less capital in such companies, and should not exceed one-tenth of the total capital.

The other is a company that ranks among the top in the industry, has no possibility of bankruptcy, and actively increases capital and expands at the bottom of the industry and carries out mergers and acquisitions. At the bottom of the industry, the leading companies in the industry enjoy a market premium, and the stock price discount is less than that of companies in the same industry. However, the expansion at the bottom of the industry will give the company a head start in the future competition, and there is more room for performance growth.

These can be slowly comprehended, there is no 100% successful tactic in **, only reasonable analysis. Every method technique has an environment in which it can be applied, and there is also a possibility of failure. Novices in the case of inaccurate grasp of the situation do not prevent the use of a **treasure mobile phone** to follow the cattle in the list of cattle to operate, so much safer, I hope it can help you, I wish you a happy investment!

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Cyclical stocks are those that are closely related to the economic cycle**.

That is, the rapid development of the economy, such listed companies are also developing fast, ****, economic development is slow, the development of such companies is also relatively slow, stock prices, such as cement, steel, building materials, resources and other industries are more typical cyclical stocks.

The economic cycle refers to the process of a country's economic development, which is fast and slow, and there are certain rules; To put it simply, when a country's economic development is too fast, banks will generally raise interest rates and other measures, and the economy will slowly slow down, and when the economy is slow, banks will generally reduce interest rates and other measures to increase investment, and the economic development will change from slow to fast; The economic tanji cycle is generally divided into four stages: recession, trough, expansion and peak.

The characteristics of weekly and simple futures stocks are very obvious, very low in weak cycles, very hot in strong cycles, very high, and some often repeat at low and high levels with the economic cycle.

Cyclical stocks are not immutable, although some of the Tong stocks belong to cyclical stocks, but the trend can also be out of the independent ****, such as the liquor sector, with the characteristics of cyclical stocks, but between 2012 and 2020, out of the independent**.

Cyclical stocks generally refer to those with obvious economic cycle characteristics, such as the well-known non-ferrous sector, infrastructure, pig cycle, paper cycle, etc.

Cyclicality refers to the fact that listed companies pay higher dividends, and with the ups and downs of the market economy cycle, cyclicality will affect the rise and fall of the market. This type of regular has a higher par value compared to others on the market.

Cyclicality is the largest type and fluctuates with the fluctuations of the economic cycle. When the overall economy rises, this kind of ** will also be rapid**; When the overall economy declines, so do these.

Cyclicals are those that pay very high dividends (relatively not too high) and rise and fall with the ups and downs of the economic cycle. This type of ** is mostly speculative**. Cyclical stocks are highly bound to economic trends and have a certain early response.

**The most typical ones are cyclical stocks such as steel, coal, and non-ferrous metals.

FYI.

The main cyclical sectors are: Tianshun Wind Energy (002531), Follett (601865), Chint Electric (601877), Liangxin Electric (002706), Stock Bar] (002706), Risen Energy (300118), Tongwei (600438), Pinggao Electric (600312), Guohai** (000750), Guanghui Automobile (600297), Espressif Technology (688018) and so on.

The cyclical sector includes: planting and forestry, aquaculture, agricultural product processing, iron and steel, new materials, building materials, general equipment, chemical products, chemical synthetic materials, new chemical materials, agricultural services, coal mining and processing, oil exploitation, electronic manufacturing, automobiles, computer equipment, communication equipment, transportation equipment services, etc.

Cyclical sectors can be divided into defensive non-cyclical sectors (such as plantation and forestry, computer equipment, aquaculture, etc.) and strong cyclical sectors (such as transportation equipment, iron and steel, oil extraction, etc.). A cyclical sector is a collection of cyclical sectors**.

This type of ** is mostly speculative**. Such as automobile manufacturing companies or real estate companies, when the overall economy rises, these also rise rapidly; When the overall economy goes downhill, these **also**.

The corresponding counterparts are non-cyclical stocks, which are companies that produce essential goods that do not change much in demand, such as food and medicine, regardless of the economic trend.

Investors should not be too superstitious about the P/E ratio, because it is often misleading for investing in cyclical stocks, and cyclical stocks with low P/E ratios do not mean that they have investment value, and on the contrary, high P/E ratios do not necessarily mean that they are overvalued.

Take steel stocks as an example, in the downturn, their P/E ratios can only remain in the single digits, and the lowest can reach less than 5 times, if investors compare it with the average P/E ratio level of the market, they think"Cheap"Later, you may face a long wait, miss out on other investment opportunities, and even suffer further losses.

Throughout the economic cycle, the cyclical performance of different industries varies. When there is an inflection point in the trough and just begins to recover, basic industries such as petrochemicals, construction, cement, and papermaking will be the first to benefit, and the stock price will also start in advance.

In the subsequent recovery and growth phase, blind capital-intensive industries such as machinery and equipment, cyclical electronic products and related parts industries will perform well, and investors can adjust their positions **related**.

At the peak of the economic boom, business is booming, and the protagonist of the rise at this time is the consumer discretionary goods, such as cars, high-end clothing, luxury goods, consumer electronics products and tourism and other industries.

Q1: What are cyclical stocks?

Q2: What does cyclical stock mean?

There are two situations of cyclical stocks: one is that the operating conditions of the issuing company are susceptible to fluctuations in the entire economic cycle, such as construction, cement, steel, automobile and other industries; The second refers to the fact that the operating conditions of the issuing company itself have the characteristics of cyclical changes, such as refrigerators, beverages, clothing and other industries. In boom times, cyclical stocks are profitable; In times of depression, the earnings of cyclical stocks decrease.

Reflected in the ** side, its fluctuation range is larger.

The choice of cyclical stocks.

In addition to analyzing the company's operating and financial status, the key to choosing cyclical stocks is to choose the right time to buy and sell, that is: buy at the end of the recession; Sell at the peak of the boom. Choosing cyclical stocks can also achieve the purpose of portfolio investment.

Due to the large volatility of dividends and ** of cyclical stocks, it is not easy to obtain accurate results using common valuation methods such as market profitability. For example, the profitability of cyclical stocks usually rises and falls more than their **, and there will be a situation where ** is at a high point and the market price profitability is low.

A more accurate way to evaluate a cyclical stock is to calculate the profitability per share of the issuing company, which indicates the amount of profit that the cyclical stock would have made during a boom period. The specific method is to average the figures of the issuing company's recent 3-year highest equity return to obtain the average rate of return of the company in the best period, and then multiply this ratio by the company's recently estimated book value to obtain the data on profitability per share.

Using this number, it is possible to calculate the ratio of ** to profitability. If this ratio is significantly lower than the general** market-to-market rate of return based on planned profits, then such cyclicals should be attractive to investors.

For example, a cyclical ** earnings after last year's decline were $1 per share, and now it is trading at $36**. The market profit rate is 24 yuan, which seems to be higher, but it does not indicate whether it is expensive or cheap, because this year's profit will rise and make the current ** appear lower.

That's where profitability comes in: if the issuing company had earnings per share of 1% and 18% respectively in the three years before the recession, the average return on equity in the best period was 15%. When the book value is $20, the ** should be able to earn $3 per share.

Trading at $36 indicates that the early ratio of profitability is 12. If the recent market rate of return is average, calculated based on planned earnings, then the ratio of ** to profitability of the cyclical stock is slightly lower and not particularly cheap.

Like the aerospace industry, the automobile industry, the steel industry, and the chemical industry, these are cycles. To put it bluntly, cyclical stocks refer to whether the rise and fall of business performance is affected by the decision to raise or reduce the law of social and economic development. When the economic development gradually moves from decline to recovery, the development trend of pro-cyclical industries will be very good, such as the banking level, the real estate sector, the construction level, etc., the increase is faster than the general development.

However, once the economic development gradually moves from prosperity to decline, the **** of countercyclical stocks will have very big ups and downs, and even the situation of **.

Cyclical stocks are highly bound to economic trends and have a certain early response. One of the most important information that can be referred to is the trend of international commodities, the trend of international commodities is a barometer of the economic situation, and the trend of cyclical stocks is closely related to the trend of international commodities.

The vast majority of industries and companies are struggling to escape the effects of the macroeconomic cycle. Although China, as an emerging market, is expected to undergo another 20 years of industrialization, during which high economic growth will be the main feature, and the likelihood of a severe recession or depression is low, cyclical characteristics remain. China's economic cycle is more manifested in the acceleration and slowdown of GDP growth, such as GDP growth of more than 12% can be regarded as a boom period, GDP growth below 8% is a boom period.

In different economic stages, the feelings of industries and enterprises will of course be very different, and during the downturn, the pressure of operation will naturally be great, and some companies will even lose money.

Typical cyclical industries in our country include basic bulk raw materials such as steel, non-ferrous metals, and chemicals, construction materials, construction machinery, machine tools, heavy trucks, equipment manufacturing and other capital-intensive fields. When the economy grows rapidly, the market demand for products in these industries is also high, and the performance of the companies in these industries will improve very significantly, and they will be sought after by investors; And when the economy is sluggish, fixed asset investment declines, demand for its products weakens, and performance and stock prices fall rapidly.