Are These Top Cyclical Stocks Worth Buying Ahead Of March 2022?
For investors wondering if the stock market is open on Presidents Day, the answer is no. Nevertheless, cyclical stocks could be one of the prominent areas of the stock market to note this week. For the most part, this would be thanks to more economic data and cyclical earnings being on tap. Regarding the earlier, investors will likely be anticipating the Bureau of Economic Analysis’ monthly personal consumption expenditures (PCE) deflator. Due Friday, the latest PCE reading would provide more clarity on inflation in the U.S.
Secondly, cyclical companies such as Home Depot (NYSE: HD), Macy’s (NYSE: M), and Lowe’s (NYSE: LOW) will be reporting earnings this week. Now, cyclical businesses that cater to consumer discretionary markets would be in an interesting spot, to say the least. Namely, the economy alongside consumer spending habits continues to recover faster than expected. This is evident from January’s retail sales data released last week. In it, the Commerce Department saw retail sales surge by 3.8% in January, crushing estimates of a 2.1% gain. Speaking of the economy and inflation, another key focus in the stock market now would be the Fed’s policy plans.
Commenting on this front is the likes of JPMorgan (NYSE: JPM). According to JPMorgan chief economist Bruce Kasman, we could see the Federal Reserve raise interest rates for the next nine consecutive meetings. While at face value this may seem extreme, we are currently dealing with the strongest inflation in the past four decades. Accordingly, while the economy is seemingly on the uptrend, some investors could be considering cyclical stocks. Should you be one of them, here are three making moves now.
Cyclical Stocks To Buy [Or Sell] This Week
Exxon Mobil Corporation
Exxon Mobil Corporation is a multinational oil and gas company. In fact, it is one of the largest manufacturers and marketers of fuels and lubricants. It also has a chemical business, with a portfolio of products that serve as building blocks for everyday consumer and industrial products. The company also has a track record of meeting society’s evolving demand for energy. XOM stock has enjoyed gains of over 40% in the past year alone.
On February 1, 2022, the company reported its fourth-quarter 2021 financials. Diving in, earnings for the quarter were $8.9 billion or $2.08 per share. Full-year earnings on the other hand were $23 billion, or $5.39 per share. The company also generated $48 billion of cash flow from operating activities, the highest level since 2012, more than covering capital investments, debt reduction, and dividends. “Our effective pandemic response, focused investments during the down-cycle, and structural cost savings positioned us to realize the full benefits of the market recovery in 2021,” said Darren Woods, chairman, and chief executive officer. The company also says that its new streamlined business structure is another example of it taking action to strengthen its competitive advantage and grow shareholder value.
Recently, the company also announced that it started production at Guyana’s second offshore oil development on the Stabroek Block, Liza Phase 2. With that, it brings the total production capacity to more than 340,000 barrels per day in only seven years since the country’s first discovery. It currently employs more than 3,500 Guyanese to support the company’s activities in Guyana. Given all of this, is XOM stock worth investing in this week?
Tilray is a pharmaceutical and cannabis company with primary operations in Ontario. In essence, it is a leading global cannabis lifestyle and consumer packaged goods company with operations all over the world. The company is a pioneer in cannabis research, cultivation, and distribution. Furthermore, its unprecedented production platform supports over 20 brands and includes comprehensive cannabis offerings, hemp-based foods, and alcoholic beverages.
Last week, the company announced that its medical cannabis division, Tilray Medical, has completed its first sale of medical cannabis in Malta. Tilray’s EU-GMP medical cannabis products are now available across pharmacies across Malta, providing patients with safe and reliable access to high-quality medical cannabis. As demand for cannabis continues to grow across Europe, the company says that it is incredibly proud to partner with established and reliable distribution partners to supply new markets with its products.
On February 9, 2022, Tilray also announced its landmark expansion of subsidiary SweetWater Brewing Company, across the state of California. It does so with distribution partners, Reyer Beer Division, tying together the continued westward expansion of the SweetWater brand. All things considered, is TLRY stock a top cyclical stock buy?
Cisco Systems Inc.
Another name to consider in the cyclical trade now would be Cisco Systems. By and large, the company’s extensive reputation in the networking hardware industry would make it a cyclical firm to consider. After all, Cisco, arguably, is a key growth driver in the tech world with its cutting-edge portfolio of networking-related services. The likes of which span data centers, the Internet of Things, cloud computing, and security solutions among others. After considering Cisco’s hand across a wide array of booming tech industries, investors could be eyeing CSCO stock.
Notably, this could be the case following the company’s latest quarterly earnings update posted last week. In it, Cisco posted solid figures across the board. For starters, the company posted an earnings per share of $0.84 on revenue of $12.70 billion for the quarter. To point out, this exceeds Wall Street’s estimates of $0.81 and $12.65 billion respectively. According to Cisco, this is mainly thanks to “incredibly strong demand” across its portfolio and “robust order strength” throughout the quarter. In particular, the company’s Internet for the Future division continues to go from strength to strength. It raked in a total quarterly revenue of $1.32 billion, marking a solid 42% year-over-year gain. Seeing as this segment contains its optical networking and public 5G offerings, this is understandable.
Moreover, Cisco also appears to be confident of its ability to perform moving forward. The company is guiding for an annual earnings per share of between $3.41 to $3.46 for fiscal 2022. For reference, this would be in line with consensus estimates of $3.42. With all this in mind, would you consider adding CSCO stock to your portfolio?