Cyclical stock,
Definition of Cyclical stock:
Companies that have cyclical stocks include car manufacturers, airlines, furniture retailers, clothing stores, hotels, and restaurants. When the economy is doing well, people can afford to buy new cars, upgrade their homes, shop, and travel.
A cyclical stock is a stock that's price is affected by macroeconomic or systematic changes in the overall economy. Cyclical stocks are known for following the cycles of an economy through expansion, peak, recession, and recovery. Most cyclical stocks involve companies that sell consumer discretionary items that consumers buy more during a booming economy but spend less on during a recession.
A security issued by a company whose profits are sensitive to economic trends. A cyclical stock will tend to move up during periods of economic growth and decline during periods of economic contraction. Automobiles, housing, and oil are examples of cyclical stocks. Compare to Non-Cyclical Stock.
How to use Cyclical stock in a sentence?
- Cyclical stocks are generally the opposite of defensive stocks. Cyclical stocks include discretionary companies, such as Starbucks or Nike, while defensive stocks are staples, such as Campbell Soup.
- Cyclical stocks are affected by macroeconomic changes, where its returns follow the cycles of an economy.
- Cyclical stocks usually have higher volatility and are expected to produce higher returns during periods of economic strength.
Meaning of Cyclical stock & Cyclical stock Definition
