What are some examples of cyclical industries
Finance: Cyclical or Defensive - Important Terms for Equity Investors
When it comes to stocks, investors shouldn't just look at company numbers. It is also important to know what type of paper it is: cyclical, pro-cyclical or defensive stocks. This is what the fund company’s “Financial Knowledge for All” campaign draws attention to. The names are derived from the typical price behavior of certain stocks in the respective economic environment. An overview:
Cyclical stocks: The stocks of companies whose price moves parallel to the business cycle are called cyclical. When the economy picks up speed, these companies' order books are full. If the economy slides into recession, these companies earn less and are less in demand on the stock market. Typical cyclicals are shares in companies in the automotive industry.
Pro-cyclical stocks: They are seen as harbingers of an economic upswing, as they are often the first to benefit from rising demand. Steel groups, the semiconductor industry or chemical companies that supply the industry with important raw materials for production are among them.
Defensive title: Their development is less strongly influenced by the current economic development. Because their products and services are in demand regardless of economic fluctuations: energy providers and telecommunications companies, for example, but also the pharmaceutical industry and food producers. (dpa)
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