In this article, we discuss the 5 best cyclical stocks to invest in. If you want to read about some more cyclical stocks, go directly to 14 Best Cyclical Stocks To Invest In.
5. The Home Depot, Inc. (NYSE:HD)
Number of Hedge Fund Holders: 68
The Home Depot, Inc. (NYSE:HD) is a home improvement retailer. In mid-August, the company beat market expectations on earnings per share and revenue for the second quarter of 2023. The board of directors of the company also announced they had authorized a $15 billion share buyback program, replacing the previous program. The firm reaffirmed 2023 outlook and the CEO said that there was positivity on the medium-to-long term outlook for home improvement and the ability to grow share in a large and fragmented market.
On October 5, Truist analyst Scot Ciccarelli maintained a Buy rating on The Home Depot, Inc. (NYSE:HD) stock and lowered the price target to $341 from $372, noting that card data suggested that retail spending trends had softened at the margin over the last few weeks.
Among the hedge funds being tracked by Insider Monkey, Florida-based investment firm Citadel Investment Group is a leading shareholder in The Home Depot, Inc. (NYSE:HD) with 2 million shares worth more than $641 million.
In its Q3 2023 investor letter, Madison Investments, an asset management firm, highlighted a few stocks and The Home Depot, Inc. (NYSE:HD) was one of them. Here is what the fund said:
“We updated the sustainable scorecard for The Home Depot, Inc. (NYSE:HD) and maintained our Above Average Rating. Home Depot’s corporate responsibilities focus on three pillars: focusing on its people, operating sustainably, and strengthening its communities. Home Depot continues to focus on its people by investing billions of dollars in wages, training, and benefit enhancement. The company’s environmental targets include the reduction of direct (Scope 1) and indirect (Scope 2) emissions by 42% by 2030, as well as a 25% decrease in emissions related to the “use of products sold” (Scope 3 emissions). Both targets are from a 2020 base year.
Separately, The Home Depot Foundation announced that it will invest $6 million in skilled trades training to address the 400,000 job openings across the construction industry. This grant launches a new program that will provide free, skilled trades training and scholarships for veterans and military families.”
4. MercadoLibre, Inc. (NASDAQ:MELI)
Number of Hedge Fund Holders: 77
MercadoLibre Inc. (NASDAQ:MELI) operates online commerce platforms in Latin America. The firm is expected to announce earnings for the third quarter of 2023 in the coming days. Analysts expect the company to beat the market expectations on earnings per share and revenue. The former is expected to increase 121% year-on-year and the latter 32% year-on-year. In the last few months, there have been four upwards revisions in these estimates as the firm continues to outperform in the ecommerce space.
On October 16, investment advisory Barclays maintained an Overweight rating on MercadoLibre, Inc. (NASDAQ:MELI) stock and lowered the price target to $1,550 from $1,625, noting there was investor fatigue around health of consumer debate heading into Q3 reports.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm Generation Investment Management is a leading shareholder in MercadoLibre Inc. (NASDAQ:MELI) with 580,023 shares worth more than $687 million.
In its Q3 2023 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and MercadoLibre, Inc. (NASDAQ:MELI) was one of them. Here is what the fund said:
“Top contributors to performance for the quarter included Latin American marketplace MercadoLibre, Inc. (NASDAQ:MELI). MercadoLibre rose as a result of continued share gains across key markets and supportive Brazilian regulations aimed at creating a level playing field in cross-border e-commerce.”
3. Booking Holdings Inc. (NASDAQ:BKNG)
Number of Hedge Fund Holders: 78
Booking Holdings Inc. (NASDAQ:BKNG) provides travel and restaurant online reservation and related services worldwide. The company recently announced that it would be appealing a decision by the European Union to block the purchase of Swedish flight booking provider Etraveli Group. Booking acquired Etraveli in a €1.63 deal in late 2021. Booking said the sale had been cleared by authorities in the US and the UK. Booking aims to combine two separate but complementary Europe-based businesses to deliver more options and competitive pricing.
On October 23, HSBC analyst Meredith Jensen initiated coverage of Booking Holdings Inc. (NASDAQ:BKNG) stock with a Buy rating and a price target of $3,650, noting that pandemic accelerated shifts in lifestyle, technology, and behaviors were shaping travel and leisure.
At the end of the second quarter of 2023, 78 hedge funds in the database of Insider Monkey held stakes worth $6.5 billion in Booking Holdings Inc. (NASDAQ:BKNG), compared to 77 in the preceding quarter worth $7 billion.
In its Q3 2023 investor letter, Ensemble Capital Management, an asset management firm, highlighted a few stocks and Booking Holdings Inc. (NASDAQ:BKNG) was one of them. Here is what the fund said:
“Booking Holdings Inc. (NASDAQ:BKNG) (+14.21%): Despite macroeconomic worries and inflation eating into global consumers’ ability to spend, households around the world continue to prioritize travel. While so called “revenge travel,” or increased travel spending after being stuck inside during COVID, has likely run its course, global hotel room nights have only recently returned to pre-COVID trends. As COVID has mostly ceased to have an impact on travel, other than in Asia where China’s extended lockdown means a recovery is still ongoing, growth going forward is likely to be more modest. But during COVID, Booking stayed on offense and has been taking market share. Notably, the company’s alternative accommodations offering has grown substantially and in recent quarters has grown faster than Airbnb.”
2. The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund Holders: 92
The Walt Disney Company (NYSE:DIS) operates as an entertainment company worldwide. Media reports indicate that the company is close to selling operations in India in a deal with local giant Reliance Industries. As part of the deal, Disney would sell the Disney Star business in the country to the local firm for around $10 billion. However, the Indian firm values the business at around $7 to $8 billion. Losing streaming rights to cricket, a popular sport in India, has hurt Disney business in the country.
On October 31, Evercore ISI analyst Vijay Jayant maintained an Outperform rating on The Walt Disney Company (NYSE:DIS) stock and lowered the price target to $100 from $110, noting the firm was trying on a new model by splitting entertainment and sports focuses.
Among the hedge funds being tracked by Insider Monkey, Florida-based investment firm Citadel Investment Group is a leading shareholder in The Walt Disney Company (NYSE:DIS) with 9.3 million shares worth more than $832 million.
In its Q3 2023 investor letter, Madison Investments, an asset management firm, highlighted a few stocks and The Walt Disney Company (NYSE:DIS) was one of them. Here is what the fund said:
“During the quarter, we sold our positions in Bristol-Myers Squibb and The Walt Disney Company (NYSE:DIS). The Walt Disney Company is facing a difficult and uncertain transition in its core media business assets including the ESPN business and other linear media assets. These media assets are cash generative but face secular decline as consumers are cutting their expensive cable subscriptions and moving to alternative streaming options. This has resulted in a decline in operating profits for the media division. The media business has long-term fixed costs related to its sports broadcasting agreement with multiple sports leagues which will further pressure profits during this transition.”
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 278
Amazon.com, Inc. (NASDAQ:AMZN) engages in the retail sale of consumer products and subscriptions through online and physical stores. The European Union is set to review the purchase of iRobot, a vacuum firm, by Amazon by the beginning of next year. Amazon purchased iRobot last year in a deal worth nearly $1.6 billion. A review of the deal, which had been suspended in August, was set for hearing in November but now may be delayed until February of next year.
On October 27, DA Davidson analyst Tom Forte maintained a Buy rating on Amazon.com, Inc. (NASDAQ:AMZN) stock and raised the price target to $157 from $150, noting that the sales and profits were better than the consensus for the firm in the recent earnings.
At the end of the second quarter of 2023, 278 hedge funds in the database of Insider Monkey held stakes worth $34 billion in Amazon.com, Inc. (NASDAQ:AMZN), compared to 243 in the preceding quarter worth $25 billion.
In its Q3 2023 investor letter, White Falcon Capital Management, an asset management firm, highlighted a few stocks and Amazon.com, Inc. (NASDAQ:AMZN) was one of them. Here is what the fund said:
“There are comparable narratives involving NU Holdings, Amazon.com, Inc. (NASDAQ:AMZN), and Teck Resources, to name a few holdings from the White Falcon portfolio. Amazon constructed its logistics network and cloud computing infrastructure using yesterday’s currency, but it is poised to capitalize on this network with the inflated dollars of tomorrow. In essence, we believe we hold wonderful businesses with growing revenue streams and potential for operating leverage – all at reasonable valuations.”
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