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Tickers in this Article: SWHC, TTM, TPX, BWA, ALV, SFLY, LF
The Nasdaq has decreased 0.2%, the S&P 500 is up 0.3% and the Dow has moved little after the morning's trading. The consumer cyclical sector is a category of stocks that relies heavily on the business cycle and economic conditions. Consumer cyclicals include industries such as automotive, housing, entertainment and retail. The category can be further divided into durable and non-durable sections. Durable cyclicals include physical goods such as hardware or vehicles, while non-durables represent items like movies or hotel services. The performance of consumer cyclicals is highly related to the state of the economy. They represent goods and services that are not considered necessities, but luxurious purchases. During contractions or recessions, people have less disposable income to spend on consumer cyclicals. When the economy is expanding or booming, the sales of these goods rise as retail and leisure spending increase.

The Consumer Cyclical sector (XLY) is up 0.5% overall, and these are the biggest movers in the sector so far:
CompanyMarket CapPercentage Change
Smith (Nasdaq:SWHC)$589 million+14.9%
Tata Motors Limited (NYSE:TTM)$2.06 billion+5.4%
Tempur-Pedic International (NYSE:TPX)$1.98 billion-4.2%
BorgWarner (NYSE:BWA)$7.97 billion+4.1%
Autoliv (NYSE:ALV)$5.75 billion+3.6%
Shutterfly (Nasdaq:SFLY)$1.12 billion+3.6%
LeapFrog Enterprises (NYSE:LF)$674.5 million-2.2%
Broker Summary: TD Ameritrade Thinkorswim

Smith (Nasdaq:SWHC) is currently at $10.34 per share after a dramatic increase of 14.9%. The company's volume is currently 9.2 million shares for the day, 4.9 times its current three-month average. If a stock is trading on low volume, then there is not much interest in the stock. On the other hand, if a stock is trading on high volume, then there is a lot of interest in the stock. Valuation ratios like the price to earnings (P/E) ratio, the price to earnings growth (PEG) ratio, the price to sales (P/S) ratio, the price to book (P/B) ratio, and the dividend yield are useful in determining how attractive a potential or existing investment is. There are generally two price/earnings ratios calculated: the first, called the trailing Price/Earnings ratio, is calculated using the previous years actual earnings; the second, called forward Price/Earnings ratio, is calculated using the next year's estimated earnings. SWHC's P/E ratio of 22.5 is above the industry average of 4.79. Usually, if a stock has a high P/E ratio, it indicates that the market expects the company to grow earnings quickly in the future. To determine the P/E ratio, an investor divides the market price of the stock by the earnings-per-share (EPS) of the stock. SEE: Understanding The P/E Ratio

Increasing 5.4%, Tata Motors Limited (NYSE:TTM) is trading at $22.54 per share. So far today, the company's volume is 829,832 shares. This is 0.6 times the current daily average. Volume is an important indicator because it indicates how significant a price shift is. A company's value as an investment is more easily estimated using valuation ratios such as the price to earnings (P/E) ratio, the price to earnings growth (PEG) ratio, the price to sales (P/S) ratio, the price to book (P/B) ratio, and the dividend yield. The price/earnings to growth (PEG) ratio is calculated by dividing the price/earnings ratio by growth in earnings-per-share; the lower the PEG ratio, the more reasonably valued the security. PEG ratio for TTM is consistent with the industry average at 0.17. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

Currently trading at $31.81 per share, Tempur-Pedic International (NYSE:TPX) has fallen 4.2%. The company's volume is currently 834,969 shares for the day, with trading activity in keeping with yesterday's which is likely to result in less activity than yesterday's volume of 1.7 million shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. In making a decision about a potential or existing investment, valuation ratios are useful as a basis for seeing whether the stock price is too high, reasonable, or a bargain. A price/sales ratio is derived by dividing stock market price by company sales. The P/S ratio for TPX is a high 1.02. In young companies, a high P/S ratio is a sign of sales growth that is expected to turn into earnings and cash flow. A limitation of the P/S ratio is that the price component measures only stock market captialization, while sales are a function of the entire capital structure, potentially leading to wide differences between levered and unlevered companies.

BorgWarner (NYSE:BWA) has risen 4.1% to hit a current price of $72.54 per share. The company is currently trading a volume of 649,974 shares. Volume is used to evaluate how meaningful the price movement of a stock is. It is important for an investor to estimate the value of any potential or existing investment; valuation ratios make this easier. The debt ratio is calculated by dividing total liabilities by total assets. BWA has a debt ratio of 53.8%. As with all financial ratios, a company's debt ratio should be compared with the industry average or similar companies.

Autoliv (NYSE:ALV) has increased to a share price of $62.42, a 3.6% rise. At 232,396 shares, the company's volume so far today is in keeping with its current three-month average. As a stock moves up or down, it is important to pay attention to the trading volume. This indicates the level of interest: the higher the volume, the more the interest. Valuation ratios allow the investor to make a quick determination as to a company's investment value. The debt-equity (D/E) ratio is a leverage ratio. ALV has a low debt-equity ratio of 18%. A low D/E ratio may be a sign that the company is not taking advantage of leverage to increase its profits. This easy-to-calculate ratio provides a general indication of a company's equity-liability relationship and is helpful to investors looking for a quick take on a company's leverage.

Shutterfly (Nasdaq:SFLY) has risen 3.6% and is currently trading at $32.10 per share. The company's volume for the morning is 331,350 shares. This is consistent with its current daily average. When a stock price moves up or down, watching the volume is a good way of identifying how significant that shift is. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. A simple P/E ratio can reveal the stock's real market value and show how the valuation compares to its industry group or a benchmark like the S&P 500 Index. The P/E ratio for SFLY is 147.5, above the industry average of 8.05. Generally speaking, the higher the P/E ratio, the higher the market expectations for a company's future performance. High P/E stocks could be "growth" stocks, while low PE stocks may be "value" stocks. SEE: Profit With The Power Of Price-To-Earnings

LeapFrog Enterprises (NYSE:LF) is down 2.2% to reach $9.82 per share. At 479,336 shares, the company's volume so far today is lighter than yesterday's volume of 2.1 million shares. In technical analysis, trading volume is used to determine the strength of a market indicator. A company's investment value can be estimated using valuation ratios such as the price to earnings (P/E) ratio, the price to earnings growth (PEG) ratio, the price to sales (P/S) ratio, the price to book (P/B) ratio, and the dividend yield. The price/earnings to growth (PEG) ratio compares a company's P/E ratio to its earnings-per-share growth rate, which tells you whether or not you are getting a good value when purchasing a stock with a high price/earnings ratio (P/E ratio). LF's PEG ratio of 0.85 is in line with the industry average. While P/E ratios are important indicators of market value, a high P/E in and of itself is not bad because it may indicate a company whose earnings are growing very rapidly, so many investors look at the PEG ratio in order to get an idea of whether or not a particular P/E ratio is justified by underlying earnings growth.

The Bottom Line The nature of the market is such that stocks will have good days and bad days. Daily stock performance should be weighed against historical performance and put in context of the market overall. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.

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