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Tickers in this Article: VC, VRA, MGA, CASC, FOSL, BWA, PII
This morning's trading has marked a bad day for the market so far. The Nasdaq has fallen 0.9%; the S&P 500 has slipped 0.7%; and the Dow has declined 0.7%. 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 currently ahead of the overall market, down only 0.4%, and its biggest movers are currently:
CompanyMarket CapPercentage Change
Visteon (NYSE:VC)$2.24 billion+8.4%
Vera Bradley (Nasdaq:VRA)$957.4 million-5.3%
Magna International Inc (NYSE:MGA)$10.36 billion-2.8%
Cascade (NYSE:CASC)$558.3 million-2%
Fossil (Nasdaq:FOSL)$5.33 billion-2%
BorgWarner (NYSE:BWA)$7.91 billion-1.9%
Polaris Industries (NYSE:PII)$5.23 billion-1.8%
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Visteon (NYSE:VC) is up 8.4% to reach a current price of $46.01 per share. At 1.3 million shares, the company's volume so far today is 1.4 times the average volume over the last three months. Volume is an important indicator in technical analysis as it is used to measure the worth of a market move. If the markets have made a strong price move either up or down the perceived strength of that move depends on the volume for that period. The higher the volume during that price move the more significant the move. 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 assumption with high price/earnings stocks (generally of the growth variety) is that investors are willing to buy at a high price because they believe that the stock has significant growth potential, and the price/earnings to growth (PEG) ratio helps investors determine the degree of reliability of that growth assumption. VC has a PEG ratio of 2.26. Because of the adjustment for earnings growth rate, the PEG ratio is somewhat more useful than many formulas for comparing companies in different industries.

Vera Bradley (Nasdaq:VRA) is trading at $22.36 per share, down 5.3%. The company's volume is currently two million shares. This is more trading activity than there was yesterday. If a stock price makes a big move up or down, volume lets us know the significance of that move. Investment valuation ratios can be very useful in estimating whether a stock price is too high, reasonable or a bargain investment opportunity. If the price/book value ratio of a stock is high, it may indicate that the stock is expensive, while a lower ratio may indicate that the stock is a bargain. VRA has a P/B ratio of 6.62 which shows that its share price is higher than its book value. This may be a sign that the company is overvalued. One problem with the P/B value ratio is that it can be difficult to calculate the true book value of a company, so investors should be aware that many measures of book value may provide only a rough estimate, and should be taken with a grain of salt. SEE: Using The Price-To-Book Ratio To Evaluate Companies

Magna International Inc (NYSE:MGA) has fallen 2.8% and is currently trading at $43.12 per share. At 369,022 shares, the company's volume so far today is 0.6 times the average daily volume. If a stock price moves on high volume, this means that the change is a significant one. A wide array of ratios can be used by investors to estimate the attractiveness of a potential or existing investment and get an idea of its valuation. Price/earnings ratios (P/E ratios) provide a measure of the relative value of a stock. MGA has a P/E ratio of 9.5, high compared to the industry average of 3.75. This could mean that the market is expecting big things over the next few months or years. A high P/E ratio indicates a stock that is expensive, while a low P/E ratio indicates a stock that is cheap. SEE: Understanding The P/E Ratio

Slipping 2%, Cascade (NYSE:CASC) is currently trading at $49.07 per share. This morning, the company is trading a volume of 11,474 shares. Volume is also used as a secondary indicator to help confirm what the price movement is suggesting. Looking at a company's valuation ratios is a good way of getting a basic idea as to its value as an investment. The price/sales ratio measures a company's stock market price by its revenues. CASC's P/S ratio of 0.97 is fairly low. The lower the P/S ratio, the more reasonably price the stock, all else being equal. 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.

Fossil (Nasdaq:FOSL) is down 2% to reach $85.92 per share. The company's volume is currently 151,252 shares for the day, 0.1 times the current three-month average. Volume indicates the level of interest that investors have in a company at its current price. Valuation ratios include 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 debt ratio is calculated by dividing total liabilities by total assets. FOSL has a low debt ratio of 33%. In other words, the company is less sensitive to changes in business or interest rates since less of its cash flow is dedicated to paying off loan expenses. However, one thing to note with this ratio: it isn't a pure measure of a company's debt (or indebtedness), as it also includes operational liabilities, such as accounts payable and taxes payable.

BorgWarner (NYSE:BWA) has decreased to $67.77 per share, a 1.9% fall. The company's volume for the day so far is 209,325 shares. At this rate, trading activity will likely be down from yesterday when 693,600 shares changed hands. A stock's volume conveys how excited investors are about it. 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. The debt-equity (D/E) ratio is a measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. BWA has a debt-equity ratio of 40%, which is on the low side. A low D/E ratio may be a sign that the company is not taking advantage of leverage to increase its profits. The D/E ratio percentage provides a much more dramatic perspective on a company's leverage position than the debt ratio percentage.

Currently trading at $74.90 per share, Polaris Industries (NYSE:PII) has fallen 1.8%. So far today, the company's volume is 143,878 shares, 0.2 times the average daily volume. Price change alone is not enough to know how a stock is doing. Volume is an important secondary indicator used to confirm trends suggested by price movement. 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. A company's capitalization (not to be confused with its market capitalization) is the term used to describe the makeup of a company's permanent or long-term capital, which consists of both long-term debt and shareholders' equity. PII has a low capitalization ratio of 14.9%. Low leverage is a significant balance sheet strength, a sign of a less risky investment. A low level of debt and a healthy proportion of equity in a company's capital structure is an indication of financial fitness.

The Bottom Line No matter the economic climate, Wall Street will always have stocks that make major moves each week. Paying close attention to the previous ratios will help you identify key times to adjust your strategy. However, these fundamental metrics must be analyzed with historic data, industry information in addition to firm specific financial statements.

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