Investopedia

Continue to Site »

Cyclical Industry

Filed Under » , , , ,
Dictionary Says

Definition of 'Cyclical Industry'

A type of an industry that is sensitive to the business cycle, such that revenues are generally higher in periods of economic prosperity and expansion, and lower in periods of economic downturn and contraction.

Companies in cyclical industries can deal with this type of volatility by implementing cuts to compensations and layoffs during bad times, and paying bonuses and hiring en masse in good times. Cyclical industries include those that produce durable goods such as raw materials and heavy equipment.
Investopedia Says

Investopedia explains 'Cyclical Industry'

For example, the airline industry is a fairly cyclical industry; in good economic times, people have more disposable income and, therefore, they are more willing to take vacations and make use of air travel.

Conversely, during bad economic times, people are much more cautious about spending. As a result, they tend to take more conservative vacations closer to home (if they go at all) and avoid expensive air travel.

Articles Of Interest

  1.

    The Ups And Downs Of Investing In Cyclical Stocks

    This strategy can be profitable but only if you know when to dump these stocks.

  2. Industry Handbook

    In this feature, we take an in-depth look at the various techniques that determine the value and investment quality of companies from an industry perspective.

  3. Given Procter & Gamble's Performance, Should The Weak Volumes Matter More?

    P&G looks like an increasingly expensive margin improvement play in consumer staples.

  4. Joh. A Benckiser Looks To Corner The Coffee Market

    Joh. A Benckiser is paying a huge price for the European coffee maker. What does this mean for the rest of the world's coffee manufacturers?

  5. Is Lululemon's Chief Product Officer to Blame For Sheer Debacle?

    Lululemon announced April 3 that Chief Product Officer Sheree Waterson was leaving the company as of April 15. Assigning blame might appease the board, but it shouldn't do anything for investors.

  6. Samsung Stores A No-Risk Opportunity For Best Buy

    Will new mini-Samsung stores rejuvenate Best Buy and threaten Apple?

  7. McCormick Continues To Defy Gravity

    McCormick's consumer volume growth looks great, but the valuation seems to preclude real gains from here.

  8. Have See-Through Pants Created An Opportunity In Lululemon Shares?

    Even with a significant recall, lululemon's valuation demands high growth.

  9. General Mills' Third Quarter Earnings

    General Mills is a solid company that delivered a solid quarter, but valuation may have gotten too steep.

  10. How To Use Price-To-Sales Ratios To Value Stocks

    Take a look at how this effective ratio can be influenced by certain critical factors.
comments powered by Disqus
Marketplace
Hot Definitions

  1. Validation Period

    The amount of time necessary for the premium on an insurance policy to cover the commissions, the cost of investigation, medical exams and other expenses associated with the issuance of the policy.

  2. Winner's Curse

    Because of incomplete information, emotions or any other number of factors regarding the item being auctioned, bidders can have a difficult time determining the item's intrinsic value. As a result, the largest overestimation of an item's value ends up winning the auction.

  3. Glocalization

    A combination of the words "globalization" and "localization" used to describe a product or service that is developed and distributed globally, but is also fashioned to accommodate the user or consumer in a local market.

  4. Disaster Loss

    A special type of tax-deductible loss, similar to a casualty loss, where a loss has been incurred by taxpayers who reside in an area that has been designated as a federal disaster area by the President.

  5. Fool In The Shower

    The notion that changes or policies designed to alter the course of the economy should be done slowly, rather than all at once.

  6. Pattern Day Trader

    An SEC designation for traders who trade the same security four or more times per day (buys and sells) over a five-day period, and for whom same-day trades make up at least 6% of their activity for that period.
Trading Center