Cyclical stocks depend on the cycles of economic expansion and recession, which means they are expected to perform better during the economic expansion. During times of recession, a cyclical stock can lose its worth. However, they have a more significant growth potential during periods of expanding economy. Cyclical industries include restaurants, hotel chains, oil companies, airlines, furniture, high-end clothing retailers, and automobile manufacturers, among others. The world experienced a pandemic-induced recession in 2020. However, the world seemed to be on the road to recovery in 2021. In 2022, inflation reached a 40-year high of 7.9% in the United States by February.
Insider Monkey analyses the 10 best cyclical stocks for inflation. EPR Properties is an American REIT that invests in entertainment properties such as amusement parks, movie theatres, and ski resorts. As of 2022, the company has more than 350 properties, 94% of which are experiential. Being a “triple net” REIT, EPR Properties doesn’t have the burden of operating costs such as property taxes, insurance, and maintenance. These costs fall upon the tenants. Despite the macroeconomic conditions, EPR Properties is going through with its expansion plans. As of March 2022, the company had $323.8 million in cash and $1.0 billion through an unsecured revolving credit facility, some of which was used to acquire two new experiential properties in Canada for a combined value of $142 million. The properties include Vacances Valcartier Resort Quebec and the Calypso Waterpark in Ottawa. The company plans to lease the properties to Premier Park Ltd in a long-term, triple net lease. EPR Properties has an attractive dividend yield of about 6.5% as of July 19. Moreover, the dividend is paid monthly instead of quarterly. Its latest monthly dividend of $0.275 was paid out on July 15 to the shareholders of record on June 29. In the first quarter of 2022, Millennium Management increased its holdings in EPR Properties by 7% and was the largest shareholder in the company with a stake of $42.59 million. In the same quarter, 25 hedge funds had bullish positions in the company compared to 22 funds in Q4 2021. Vale S.A. is a Brazilian minerals and mining company. With the downward spiral in the iron and copper industries, the company is holding its ground regarding shareholder returns. During Q1 2022, Vale S.A. paid out $3.5 billion in dividends and made share repurchases worth $1.8 billion. The dividend yield was approximately 4.1% and with 2.1% in buybacks, the returns sum up to more than 6%. This deal will solidify the company’s position in the growing EV industry. Moreover, on June 9, the company announced that it had completed its studies to initiate nickel sulfate operations in Canada potentially. The expected capacity per annum is around 25,000 tonnes. In addition, Vale S.A. plans to make a capital expenditure of $5.8 billion in 2022, including the Serra Sul project, which is expected to add 20 million tonnes per year to the S11D mine’s 90 million tonnes capacity. The company is also looking forward to cutting costs by investing in solar energy projects such as the Sol do Cerrado project. For more details, click 10 Best Cyclical Stocks For Inflation.
