Investing in Cyclical Stocks

By Matthew DiLallo – Updated Sep 24, 2025 at 4:43 PM | Fact-checked by Frank Bass

Key Points

Economic cycles affect cyclical stocks, influencing their profit margins and stock prices.
Investing in cyclical stocks offers growth during economic expansions but may pose risks in recessions.
Combining cyclical and defensive stocks can balance growth potential and risk in a portfolio.

The economy moves in a cycle with four basic stages:

Expansion: A period of sustained growth.
Peak: A time of slowing growth.
Contraction: A period of economic decline, also called a recession.
Trough: A transitional time when the economy stops declining and begins to recover.

This cycle can have a significant effect on industries tied to economic growth. Stocks in those sectors tend to be very cyclical. Corporate profits typically rise during an expansion and contract during a recession, taking the price of cyclical stocks with them. This cyclicality contrasts with other types of stocks that tend to generate steady profits in good times or bad, making them relatively recession-proof.

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Chart showing V-shaped stock market recovery. — Image source: Getty Images.

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The economy has been expanding for the past several years. This continued growth has come even though the Federal Reserve has kept interest rates high to tame inflation. While higher rates have slowed the economy, it's not yet clear whether it's nearing a peak or just taking a breather. However, the uncertainty has caused a lot of volatility in cyclical stocks.

Here’s what you should know about investing in cyclical stocks.

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Did You Know...

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Ticker Information Table
Name and ticker	Market cap	Dividend yield	Industry
Walt Disney (NYSE:DIS)	$205.5 billion	0.87%	Entertainment
Airbnb (NASDAQ:ABNB)	$78.7 billion	0.00%	Hotels, Restaurants and Leisure
EPR Properties (NYSE:EPR)	$4.2 billion	6.40%	Specialized REITs
Nucor (NYSE:NUE)	$32.3 billion	1.57%	Metals and Mining

Data as of Oct 22, 2025.

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1. The Walt Disney Company

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NYSE: DIS

Walt Disney

Today's Change

(-0.56%) $-0.64

Current Price

$113.66

Key Data Points

Market Cap

$206B

Day's Range

$113.14 - $114.28

52wk Range

$80.10 - $124.69

Volume

3.3M

Avg Vol

8.1M

Gross Margin

31.80%

Dividend Yield

0.01%

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NASDAQ: ABNB

Airbnb

Today's Change

(-0.41%) $-0.53

Current Price

$128.03

Key Data Points

Market Cap

$79B

Day's Range

$127.50 - $128.89

52wk Range

$99.88 - $163.93

Volume

74K

Avg Vol

4.9M

Gross Margin

72.06%

Dividend Yield

N/A

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Airbnb (ABNB -0.36%) is a leading online vacation rental platform. While demand for vacations tends to decline during a recession, Airbnb's platform should prove to be very resilient. "Airbnb is a fundamentally stronger company today than it was several years ago," the company wrote in its fourth-quarter shareholder letter. "We're continuing to build on this momentum in 2025, executing a multiyear strategy to perfect the core service, accelerate growth in global markets, and launch and scale new offerings."

The company wants its app to be a lot like Amazon (AMZN -2.04%). It aims to be the go-to source for travel and living needs. The company intends to build several new businesses in the coming years. It plans to start by investing in experiences that enhance user stays, such as tours led by locals. Airbnb also anticipates expanding into other new areas, like partnering with companies such as grocery stores and cleaning services. The company's expansion strategy should enable it to continue growing in the future, even if there's a cyclical downturn in travel.

3. EPR Properties

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NYSE: EPR

EPR Properties

Today's Change

(0.07%) $0.04

Current Price

$54.57

Key Data Points

Market Cap

$4B

Day's Range

$54.22 - $54.85

52wk Range

$41.75 - $61.24

Volume

7.1K

Avg Vol

954K

Gross Margin

68.12%

Dividend Yield

0.06%

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EPR Properties (EPR +0.07%) is a real estate investment trust (REIT) focused on owning experiential real estate such as movie theaters, ski resorts, eat-and-play locations, and other attractions. Demand for these experiences tends to decline during a recession. However, an economic downturn likely won't have as much of an impact on EPR Properties due to its business model.

The REIT leases its properties to operating tenants under long-term triple net (NNN) agreements. Those leases supply it with a very stable rental income. It pays out a meaningful portion of its steady cash flow via its monthly dividend. EPR reinvests the rest into buying additional income-producing experiential properties. Those investments help grow its rental income, which should enable the REIT to continue increasing its dividend even during a recession.

4. Nucor

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NYSE: NUE

Nucor

Today's Change

(-2.66%) $-3.74

Current Price

$136.78

Key Data Points

Market Cap

$32B

Day's Range

$136.54 - $140.45

52wk Range

$97.59 - $170.52

Volume

35K

Avg Vol

1.6M

Gross Margin

10.60%

Dividend Yield

0.02%

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Examples of cyclical industries

It's not practical to list every cyclical industry. However, to give you a good idea of some of the sectors prone to cyclicality, here are eight prominent and easy-to-understand examples:

Airlines: During good economic times, individuals and businesses tend to be more willing and able to spend money on airline tickets than during lean periods.

Hotels: Like airlines, hotels depend on individuals and businesses spending money on travel.

Retail: During economic contractions, people tend to spend less on discretionary retail goods. However, retailers primarily selling things that people need are not as cyclical, especially when they prioritize offering discounts. Walmart (WMT +1.15%) can be considered countercyclical since the company's sales often increase during tough times.

Restaurants: During economic downturns, people eat at home more often than they do during prosperous times, and restaurant stocks often suffer as a result.

Automakers: Consumers tend to hang on to their vehicles longer when recessions hit and are more inclined to buy new vehicles in prosperous times, so automaker stocks tend to be quite cyclical.

Technology: Most (but not all) tech stocks are cyclical. Individuals and businesses are less inclined to spend money on the latest technologies and electronic devices during recessions.

Banks: Bank stocks are cyclical. In a recession, the profitability of banks often declines. Recessions reduce demand for banking products, including mortgages, auto loans, and credit cards, and more consumers who already have loans struggle to pay their debts. In addition, interest rates usually fall during recessions, causing bank profit margins to contract.

Manufacturing: In tough times, companies that manufacture physical products generally experience plunging demand as individuals and businesses spend less on pretty much everything.

Many of the sectors mentioned above, such as automotive and retail, are consumer-facing industries and, therefore part of the consumer cyclical sector. Consumer cyclicals are consumer discretionary goods that, unlike consumer staples, aren't strictly necessary purchases.

Investing in Cyclical Stocks

Key Points

1. The Walt Disney Company

Key Data Points

Key Data Points

3. EPR Properties

Key Data Points

4. Nucor

Key Data Points

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Key Data Points

Key Data Points

Key Data Points

Key Data Points

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Characteristics of cyclical stocks

1. The Walt Disney Company

Related investing topics

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When should you buy cyclical stocks?

FAQs

3. EPR Properties

2. Airbnb

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Examples of cyclical industries

4. Nucor

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