What is cyclical stock? How to invest in cyclical stock?
Cyclical stocks include Shanying paper, Shengnong development, Wenshi, Baotou Steel, Zijin Mining and so on. These cyclical stocks are representative stocks in the industry.
In terms of the whole market, the cyclical stocks include raw material industries such as steel, non-ferrous metals and chemical industry, pig cycle and chicken cycle in agriculture, cash crop cycle, brokerage cycle and banking cycle in economy, excavator cycle and communication cycle in industry.
Therefore, as long as the commodity fluctuation conforms to the economic cycle, then these listed companies are cyclical stocks.
How to invest in cyclical stocks?
Cyclical stocks are the focus of super bull stocks. Usually, cyclical stocks refer to the stocks of listed companies whose operating performance and stock price fluctuate with the boom and bust of economy. Although the vast majority of stocks will be affected by the economic cycle and produce cyclical fluctuations, according to the "whip sheath effect", the prices of oil, coal, nonferrous metals, iron and steel, chemical and other upstream bulk commodities will usually bear the brunt and show greater fluctuations. The net profit of Listed Companies in these industries fluctuates more, and then they often have a cycle from large losses to large profits Periodic change. The excessive optimism or pessimism caused by investors' greed and fear further enlarges the volatility of stock price.
The analysis of commodity prices can not only look at the macro-economic cycle, but also clarify the effect of multiple sub cycles and other important factors. It should be noted that the change of demand is generally smooth and continuous in both expansion and contraction periods, while the change of supply tends to jump by steps. For example, if an iron and steel company closes several blast furnaces because it can't afford to lose money, it will reduce the steel supply by millions of tons every year. When the supply side changes more than the demand side, even in the period of economic contraction and demand decline, the supply of bulk commodities will be short of demand. At that time, the price will rise sharply in a counter cyclical manner, and vice versa.
Investment cycle stocks should focus on analyzing the fundamentals of listed companies from four aspects: industry prospect, market position, performance elasticity and production cost. Companies in the growth stage of the industry have the advantages of low risk, high income, and double positive advantages of rising price and sales. Facing the sunset industry, listed companies can only choose the leading companies with low cost advantages, including environmental protection factors. With the improvement of industry concentration, such companies may break out stage bull stocks. Although the loss cycle stocks which are struggling through the cold winter have more explosive power in the bull market stage, investors need to pay more attention to risk control.
Investment cycle stocks need reverse thinking and reverse investment. "If it's dry, it's a boat; if it's water, it's a car.". In the choice of time point, investors should wait patiently until the commodity price falls below the average dynamic cost line, and their inventory, price to book ratio and price to earnings ratio calculated by the average income in the complete cycle of the stock are at historical low levels, and decisively buy and maintain the pyramid position. When other investors are enthusiastic about buying emotions, for example, stocks that face significant bubbles such as stock prices rising to a market value exceeding the value of reserves should be resolutely sold, so that "expensive is like dirt, cheap to take jade".