What Are Cyclical Stocks?
Cyclical stocks sectors often exist along industry lines. Industries such as autos, airlines, furniture, steel, paper goods, heavy machinery, and hotels are a few examples. Company profits, as well as share prices tend to rise and fall with the current economic conditions. Cyclical stocks profit when the economy is strong, but will suffer greater loses in an economic downturn.
Cyclical stocks can and do move independently, as one stock may be going up while another stock is going down all within the same industry. Purchasing from the cyclical stock sectors requires your best stock picking analysis.