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3 Cyclical Stocks To Watch Following Fed Chair Powell's Speech

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Aug 26, 2022 (StockMarket.com via COMTEX) -- Are These The Best Cyclical Stocks To Buy After Fed Chair Jerome Powell's Comments At Jackson Hole?

Many investors choose to invest in cyclical stocks in the stock market . In brief, these are stocks that tend to go up and down with the economy. For example, when the economy is doing well, cyclical stocks tend to do well, and when the economy is struggling, cyclical stocks tend to struggle as well.

What Are Cyclical Stocks?

By definition, cyclical stocks are companies whose businesses tend to rise and fall with the overall economy. They are often in industries that are highly sensitive to changes in consumer demand, such as housing, automobiles, luxury goods, and energy. When the economy is strong and consumers are confident, cyclical stocks tend to perform well. Notably, some of the most popular cyclical stocks in the stock market today are names such as Visa, Inc. ( NYSE: V ), NVIDIA Corporation ( NASDAQ: NVDA ), and Bank Of America Corporation ( NYSE: BAC ) to name a few.

However, when the economy weakens, these stocks typically underperform. For this reason, cyclical stocks are often seen as riskier than other types of investments. However, they can also offer investors the potential for higher returns during periods of economic growth. With that, here are 3 hot cyclical stocks to watch in the stock market now.

Why Cyclical Stocks?

There are a few reasons why investors might choose to invest in cyclical stocks. First, cyclical stocks tend to be cheaper during economic downturns, so investors can buy them at a discount. Second, cyclical stocks tend to rebound quickly during economic recoveries, so investors can make a quick profit. Finally, cyclical stocks can help to diversify an investment portfolio, which can reduce risk. For all these reasons, cyclical stocks can be an attractive option for many investors. If you're keen on investing in cyclical stocks today, here are three to check out in the stock market today .

Cyclical Stocks To Watch In The Stock Market Now

VALE S.A. (VALE Stock)

Starting off the list, VALE S.A. (VALE) is the largest producer of nickel in the world. For starters, VALE S.A. has nickel operations in areas around the world. These include countries such as Brazil, Canada, and Indonesia, among others. Next, the company has fully owned and joint venture refineries in China, South Korea, Japan, the United Kingdom, and Taiwan. Currently, VA stock has a dividend yield of 5.87%.

Meanwhile, last month, VALE released its Q2 2022 financial results. Diving in, Vale notched in earnings per share of $0.88, along with revenue of $11.2 billion for the second quarter of 2022. For comparison, Wall Street's consensus earnings estimate was $0.81 per share, along with revenue of $13.7 billion.

The company's CEO Eduardo Bartolomeo commented in his letter to shareholders, "With the substantial reshaping of our business, such as the sale of the Midwestern System, the company is much better prepared to deliver on its production recovery agenda. We stay committed to a disciplined capital allocation and to generating and returning value to our shareholders, as further evidenced by the announcement to pay US$ 3 billion in dividends." Just this week, shares of VALE Stock have rebounded over 5%, and is currently trading on Friday afternoon at $13.50 per share. Considering this, is VALE stock a good addition to your watchlist today?

[Read More] 4 Top Semiconductor Stocks To Watch This Week

Freeport-McMoRan Inc. (FCX Stock)

Next up, Freeport-McMoRan (FCX) is one of the world's largest producers of copper. For the uninitiated, Freeport-McMoran mines and smelters are located in North and South America, Asia, and Africa. Moreover, the company's products are used in a wide variety of industries. In detail, this includes automotive, construction, electronics, and manufacturing.

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