Are These The Best Cyclical Stocks To Invest In Ahead Of May 2022?
While the broader stock market may be taking a breather, some would argue that cyclical stocks remain viable plays. By and large, cyclical industries are heavily reliant on the state of the economy. At a glance, with surging inflation now, cyclical stocks may not be an immediate choice for investors. Nonetheless, some of the top cyclical players around are companies that have been in business for decades. Not to mention, as more earnings roll out this week, it seems that consumers continue to back all of them despite rising prices.
For example, we could look at the likes of Kimberly-Clark (NYSE: KMB). Earlier today, the consumer products titan posted solid figures in its first fiscal quarter report. Diving in, the company is looking at earnings of $1.55 per share on revenue of $5.09 billion for the quarter. These handily beat Wall Street’s consensus estimates of $1.35 and $4.91 billion respectively. Despite facing a “highly inflationary environment,” Kimberly-Clark is also raising its sales guidance for the fiscal year. In detail, the company is now guiding for an annual revenue increase of 3% to 4% year-over-year. For those unaware, Kimberly-Clark primarily provides paper-based consumer products.
At the same time, even companies in the construction industry like Nucor (NYSE: NUE) are thriving now. Just yesterday, the steel industry titan announced solid figures in its latest earnings call. In it, Nucor saw an earnings per share of $7.67, well above analyst forecasts of $7.30. Additionally, the company’s total revenue for the quarter was $10.49 billion, a sizable 49% year-over-year jump. Overall, it seems that the momentum of the economic recovery is still commendable. With this being good news for cyclical stocks, here are three more to watch in the stock market today.
Cyclical Stocks To Buy [Or Sell] Now
Cleveland-Cliffs Inc.
To begin with, we have Cleveland-Cliffs or CLF, for short. In essence, CLF is a leading name in the North American mining scene. The company focuses on the mining, beneficiation, and pelletizing of iron ore. Additionally, it also has a hand in the steelmaking industry with operations in stamping and tooling. Worth noting, CLF is also the largest flat-rolled steel producer in North America, by the company’s estimates. With today’s gains amongst cyclical names, CLF stock could be worth looking at.
Notably, CLF released its first fiscal quarter earnings earlier today. All in all, the company posted solid figures across the board. CLF is currently boasting earnings of $1.71 per share on revenue of $6.0 billion for the quarter. For reference, this is versus Wall Street expectations of $1.49 and $5.43 billion respectively. Year-over-year, this adds up to massive gains of 1,700% in earnings per share and 50% in revenue. Simply put, CLF appears to be going from strength to strength on the operational front now.
Providing more insight into these results is CEO Lourenco Goncalves. He notes that CLF’s first-quarter results highlight the company’s continued success after renewing its fixed-price contracts last year. Not forgetting, the company is seeing strong profitability despite the recent dip in spot prices for steel going into the first quarter of the year. Should the current trend persist, CLF is expecting another free cash flow record in the current fiscal year as well. After considering all this, would CLF stock be a top pick for you?
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American Express Company
American Express (AXP) is a cyclical company that provides a globally integrated payments platform. Its platform allows customers to access products, insights, and experiences that enrich lives and build businesses. In fact, AXP is a leader in providing payment products and services to a broad range of customers including small businesses and large corporations around the globe. Today, the company reported its first-quarter financials for 2022.
Diving in, the company reported total revenue of $11.73 billion, an increase of 29% year-over-year. It also reported a net income of $2.1 billion or $2.73 per share. Notably, its global consumer services group reported a pretax income of $1.7 billion. “Our strong first-quarter results demonstrated the continued business momentum we’ve achieved over the last several quarters despite the uncertain macro environment,” said Stephen J. Squeri, Chairman and Chief Executive Officer. “Revenues were up 29 percent year-over-year, driven by Card Member spending growth of 35 percent globally on an FX-adjusted basis, with volumes reaching a monthly record high in March.”
The company also says that it saw an increase in engagement across its customer categories, with strong spending by Millennial and Gen Z card members. On top of that, AXP also reaffirms its 2022 revenue and earnings guidance. All things considered, would you invest in AXP stock in light of its earnings?
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Blackstone Inc.
Following that, we have Blackstone, one of the world’s largest asset managers. It continues to create a positive economic impact and long-term value for its investors. It has over $900 billion in assets under management including investment vehicles focused on private equity, real estate, public debt, and equity. The company also invests in infrastructure, life sciences, and growth equity.
On April 21, 2022, the company also reported its first-quarter financials. Firstly, total revenues for the quarter were $5.12 billion. Secondly, GAAP net income was $2.6 billion for the quarter. The company says that this is one of the best first quarters in Blackstone’s 36-year history. This comes especially during an extremely challenging market backdrop. It also says that its flagship strategies continue to deliver significant outperformance for investors while its powerful platform expansion continued with $50 billion of inflows in the quarter.
Recently, it also struck a $13 billion deal to acquire one of the biggest portfolios of student housing in the U.S., extending a streak of real estate transactions. The likes of which have already made the company one of the biggest owners of inner-city apartment blocks and suburban homes. In theory, Blackstone appears to be keen on making the most of college students returning to campus housing as pandemic conditions improve. With that being said, is BX stock a buy?
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