Businesses that rise and fall with the economic cycle have always baffled investors. During the past twelve months, the Consumer Discretionary Select Sector SPDR Fund – made up of firms in cyclical sectors like retail, hotels, restaurants, and leisure – has performed better than the wider market. Delta Airlines, an airline carrier based in the US, took a huge hit in 2020 as international travel ground to a halt. It has ordered new aircraft as bookings improve – the airline says leisure bookings have recovered to about 85% of the level seen in 2019 – and airline executives have affirmed that Delta could break even as early as June after posting losses of $1.2 in the first quarter of 2021. Walmart, an Arkansas-based retail chain, actually registered an increase in earnings during the COVID-19 pandemic. The firm also plans to invest $14 billion this year in distribution networks alone to establish itself further in the retail sector. Haverty Furniture Companies, a furniture brand, posted a 31% increase in sales in the first quarter of 2021 compared to the same period last year. The company is now working to hire staff amid business growth. It is very difficult to predict economic cycles with enough precision to make healthy gains from cyclical stocks. However, the disruption of the stock market by overvalued technology stocks seems to be occupying the attention of most financial advisors and this is a good chance to place high-risk, high-reward bets on undervalued cyclicals in the first half of 2021.
Insider Monkey analyses 12 undervalued cyclical stocks for 2021. The Dixie Group also manufactures engineered wood products. Two brands associated with the group, Masland Residential and Dixie Home, provide products like residential carpets and vinyl flooring products to retailers, furniture stores, interior designers, and luxury home builders. Delta Airlines is a Georgia-based air transportation service. The firm provides air transportation, cargo, as well as aircraft maintenance, repair, and overhaul services. The company also offers aircraft charter services to select customers. Fuwei Films (Holdings) Co., Ltd is a China-based company that makes and sells biaxially oriented polyethylene-terephthalate films. Investment advisory Evercore had rated TPI Composites, Inc. positively. BBQ Holdings, Inc. is a Wisconsin-based franchise of restaurants that serve pork ribs, chicken, beef brisket, along with several flavors of barbecue sauce. The company was earlier this month identified as one of the restaurant stocks with the biggest year-to-date returns by investment firm Advisor Shares. Cannae Holdings, Inc. is a Las Vegas-based holding firm with interests in the restaurants, technology, healthcare, and financial services sectors. The holding firm primarily manages and operates several different firms and investments, in addition to making majority and minority equity portfolio investments in businesses. For more details, click to read 12 Undervalued Cyclical Stocks for 2021.
