Re: what you wanted to know about cyclic stocks but were afraid to ask
Gulon main rung bhare baad e nau bahar chale
Chale bhi aae ke Gulshan ka karobar chale
Re: what you wanted to know about cyclic stocks but were afraid to ask
Lyrics seem familiar - sung by Rafi? Meaning over my head. Gulon - garden? karobar - business? gulshan blossom? I be confusion.
Aapnay itni serious thread ko derail kiya (jk)
Re: what you wanted to know about cyclic stocks but were afraid to ask
sung by Mehdi Hassan, Gulon = plural of Gul= Flowers, Gulshan=Garden… shayar Faiz Ahmed Faiz apne mehboob ke na hone per apni life ke garden ki boringness ko rota mangta aur ye wish karta ke uska mehboob ajae to uski life ka garden main runja aa jae.
PS: sorry for derailing 
Re: what you wanted to know about cyclic stocks but were afraid to ask
Thanks! You can derail my threads any time!!! (Otherwise I have to do it myself).
Re: what you wanted to know about cyclic stocks but were afraid to ask
Thanx Southie 
Re: what you wanted to know about cyclic stocks but were afraid to ask
I think you took offence to my question for which I apologise. I wasn't trying to discourage or stop you from posting. When you mentioned we I thought you were working for some investment company or brokerage and was posting some research from them. That is why I was interested. As for the content in your posts I was finding it difficult to understand hence my curiosity.
^ not your fault. I jumped to the wrong conclusion. Hence I owe you an apology.
As Rodney King said " cant we all get along?"
Re: what you wanted to know about cyclic stocks but were afraid to ask
Another classic cyclical sector is home building. Home builders do great in a boom and languish during busts. To add insult to injury, they overbuild during booms thus adding to their pain during busts.
So at the peak of economic cycle their prices skyrocket. Their earnings.are at peak. So p/e appears reasonable. This happened in 2007. By 2010 their inventory levels high. Earnings disappeared. So p/e close to infinity.
If you bought builders with good balance sheet you made a killing. Up 140% on avergae.
Re: what you wanted to know about cyclic stocks but were afraid to ask
But now? I would stay away.
Re: what you wanted to know about cyclic stocks but were afraid to ask
Those who insist on P to E being a valuation metric probably were on the wrong side of the apple trade. At 705 the p to e appeared cheap at circa 12. Little did they realize the E was probably peak earnings. This thread would have kept them out of trouble.
Ditto AMAT. When E for this stocks hovers around 0 or even negative, that's a positive sign. Bad is good. For amat.
Doesn't mean u don't do ur own homework.
Re: what you wanted to know about cyclic stocks but were afraid to ask
Because I am fasting these days, my Pee ratio has really declined during the trading hours.
Re: what you wanted to know about cyclic stocks but were afraid to ask
In such matters our staff defers to a greater authority.
Re: what you wanted to know about cyclic stocks but were afraid to ask
One cyclical stock that "left the station in a hurry" after the 07-09 collapse is Caterpillar - CAT. I think it shot ho from 25 to ~ 110 from 09 to abt earlt 2013. ( these numbers are just off top of my head. But u get the picture).
Of late, the mining companies have been cutting back on CAPEX. Also they have been using up inventory. Result? Sales for CAT are on a downward trajectory. And expel Ted to remain so for 6 more months.
Remember what we learner abt cyclical stocks? Buy when sh1t hits the fan. Or when e disappears or is negative. But do analyze balance sheet strength. We have gone over how to do that in previous threads. And no, NAV in and of itself tells you nothing about balance sheet. Debt/NAV OTHERWISE KNOWN as debt /equity is an indicator of balance sheet strength.
CAT is at 88 I think. Nit touching it till it plunges to 60. Meanehike look out for an analysis of its balance sheet in these the forum threads.
Arrigoto!
Re: what you wanted to know about cyclic stocks but were afraid to ask
Just as the above report was filed, CAT announced share buybacks worth I think 1 billion dollars. This is on top of the same amount it spent buying buck shares in last 12 months. Investors probably rewarded it today.
But buying back shares in the 110-88 $ range? Tauba hai!
Re: what you wanted to know about cyclic stocks but were afraid to ask
Just as the above report was filed, CAT announced share buybacks worth I think 1 billion dollars. This is on top of the same amount it spent buying buck shares in last 12 months. Investors probably rewarded it today.
But buying back shares in the 110-88 $ range? Tauba hai!
In 2013, construction spending fell. So CAT took a beating AFTER the buybacks. In 2014 construction rebounded. And CAT rebounded right along.
Guess which sector is suffering now?
Re: what you wanted to know about cyclic stocks but were afraid to ask
Glad you asked, Southie. Today's WSJ states agriculture spending is down. Too much crops. Supply high. So price low. Lower profit. Less to spend on farm equipment.
So which stock gets adversely affected, Southie?
Re: what you wanted to know about cyclic stocks but were afraid to ask
#DearReader](http://www.paklinks.com/gs/usertag.php?do=list&action=hash&hash=DearReader) : Deere (DE) of course!
Right on #DearReader](http://www.paklinks.com/gs/usertag.php?do=list&action=hash&hash=DearReader) !
DE earnings have been trending down. Stock has dropped 13 pct from peak. The stock is slightly below 2007 peak.
EPS in 2009 trough about 2.5. Pealed 2013 at around 8..that is huge jjmp. What do u expect. This baby is as cyclical as it gets.
Re: what you wanted to know about cyclic stocks but were afraid to ask
So we r far from trough earnings. We will be watching this baby closely. If earnings tumble (say reach 3.5), we might get interested.
Bad news is good time to buy stocks. Especially cyclicals.
Re: what you wanted to know about cyclic stocks but were afraid to ask
Thanks, Southie.
These posts drive home the dangers (and opportunities) in cyclical stocks. Your thesis (which is really not your thesis, this is widely known) has been validated.
CAT closed at 66 this week. Only 10 pct higher than the 60 you asked for 2 years and 2 months ago.
So, are you buying?
Re: what you wanted to know about cyclic stocks but were afraid to ask
There was so much sannata in this thread. And suddenly you get a like.
And guess on who the good Samaritan is?
Re: what you wanted to know about cyclic stocks but were afraid to ask
Another good example. DE peaked at circa 100 at peak EPS of 8. At the Time of ur post de had dropped to 85. Still high as u noted. You wanted to wait till EPS reaches trough of say 3.5 the EPS now is 6. Stock at 76. Down 10 pct.from ur post. And 23 pct from peak.
The trough price in 2009 25. Exactly same as CAT. CAT is at 66. I wouod wait for DE to reach 66. Maybe still lower.