Cyclical companies are ones with volatile profits that fluctuate to extremes with the state of their industry or the greater economy.
Notoriously cyclical industries include automobiles, airlines, steel, natural gas, oil, refining, construction, dry bulk shipping, oil & gas service providers, financials, and hotels. Such companies typically have high fixed cost structures and narrow profit margins. Their share prices tend to swing in the same direction as the companies' profits, making for what can sometimes make for wild ride.
Related Fool Articles
Recent Mentions on Fool.com
- Are These 3 Refiners Doomed?
- Read This Before You Rush Into Oil Stocks
- CIT Group Inc: A Host of Tailwinds Could Fuel Big Valuation Growth
- Does Caterpillar or Deere Build the Better Dividend Paying Machine?
- BofI Holding Inc: Continually the Best in Class - With Good Reason
- Now Could Be the Best Time To Buy Annaly Capital Management and Two Harbors Stock