Are cyclical stocks suitable for long-term investors?

Many cyclical stocks are suitable for long-term investors. Several cyclical companies have taken steps to make their businesses more resilient by maintaining strong financial profiles, ensuring they can continue to grow and pay dividends during a cyclical downturn.

Is Amazon a cyclical stock?

Yes, Amazon would be considered a cyclical stock. Its e-commerce business would be sensitive to cyclical changes in consumer discretionary spending. Likewise, its cloud computing business (AWS) would be sensitive to changes in corporate investment.

Do cyclical stocks pay dividends?

Yes, many cyclical stocks pay dividends. Many have strong businesses and financial profiles, allowing them to continue paying and growing dividends during a cyclical downturn. However, others with weaker financial profiles might need to suspend their dividends during a deep economic downturn.

Are cyclical stocks a good hedge against inflation?

Cyclical stocks can be a good hedge against inflation under certain conditions. They tend to be a good hedge when consumer spending is strong because that gives them pricing power. However, they're not a good inflation hedge during periods of high interest rates or when discretionary spending is falling.

Is there an ETF for cyclical stocks?

There isn't one specific ETF focused on cyclical stocks. However, several ETFs focus on cyclical sectors, such as consumer discretionary (e.g., Consumer Discretionary Select Sector SPDR Fund (NYSEMKT:XLY)) and industrial (e.g., Industrial Select Sector SPDR Fund (NYSEMKT:XLI)).

Can cyclical stocks be part of a retirement portfolio?

Cyclical stocks can be part of a diversified retirement portfolio. Ideally, you'd want to hold the highest quality companies in a retirement account, especially those tied to the economic cycle.

How often should I review my cyclical stock investments?

You should review your cyclical stock investments at least once a year to ensure they remain financially strong. You should also consider reviewing your cyclical stock investments after a market dip driven by concerns that a recession could be on the horizon.

Best Cyclical Stocks to Buy in 2026

Best Cyclical Stocks to Buy in 2026: Everything Investors Need to Know

By Matthew DiLallo – Updated Jul 15, 2026 at 9:58 AM EST | Fact-checked by Frank Bass

Key Points

Cyclical stocks surge in expansions but dip in recessions, affecting industries like entertainment and travel.
Top picks include Disney and Airbnb, both showing resilience and growth despite economic uncertainty.
Investors should blend cyclical with defensive stocks for balance during economic fluctuations.

The economy moves in a cycle with four basic stages: expansion (sustained growth), peak (slowing growth), contraction or recession (economic decline), and trough (the turning point before recovery begins).

This cycle has a significant effect on industries tied to economic growth. Corporate profits typically rise during expansions and fall during recessions, pulling the prices of cyclical stocks along with them. Understanding how cyclicality works and which stocks can weather it best is essential for any investor building a long-term portfolio.

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GettyImages-1398219003-1200x800-5b2df79 — Image source: Getty Images.

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What is a cyclical stock?

A cyclical stock is one whose underlying business generally follows the economic cycle. Cyclical companies perform well during expansions but typically see declining sales and profits during recessions and other economic slowdowns. This contrasts with defensive stocks, which tend to generate steady profits in good times and bad.

The economy has been expanding for several years, even as the Federal Reserve kept interest rates elevated to tame inflation. That higher-rate environment has slowed growth in some corners of the market without triggering a full recession, but the uncertainty has created meaningful volatility in cyclical stocks.

Key characteristics of cyclical stocks:

Demand for their products rises during expansions and falls during recessions
Profitability is highly variable -- strong in good times, often negative in downturns
Stock prices tend to be more volatile, especially near economic peaks and troughs

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Top cyclical stocks to consider

Despite economic uncertainty, some cyclical stocks have strong long-term tailwinds that could help them thrive even if headwinds intensify. Here are four worth considering.

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Ticker Information Table
Name and ticker	Market capMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.	Dividend yield	Industry
Walt Disney (NYSE:DIS)	$169.6 billion	1.54%	Entertainment
Airbnb (NASDAQ:ABNB)	$86.6 billion	0.00%	Hotels, Restaurants and Leisure
EPR Properties (NYSE:EPR)	$4.8 billion	5.79%	Specialized REITs
Nucor (NYSE:NUE)	$53.9 billion	0.94%	Metals and Mining

Data as of Jul 20, 2026. Showing 4 of 4 total entries.

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1. The Walt Disney Company

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NYSE: DIS

Walt Disney

Today's Change

(-1.31%) $-1.28

Current Price

$96.39

Key Data Points

Market Cap

$170B

Day's Range

$96.00 - $98.35

52wk Range

$92.19 - $123.40

Volume

458K

Avg Vol

9.7M

Gross Margin

31.63%

Dividend Yield

1.54%

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Entertainment giant Disney (DIS -1.31%) has a cyclical business. Consumers reduce their spending on discretionary purchases, such as vacations, during a recession. That affects Disney’s experiences (parks, cruises, and vacation clubs) and other consumer products businesses.

Despite concerns about the economy, Disney is seeing resilient demand for its experiences. In its fiscal second quarter of 2026, revenue rose 7%, driven by a 10% increase in its entertainment segment and a 7% rise in experiences revenue, more than offsetting a slower 2% growth rate in sports.

Disney believes its unique ability to create characters, stories, and franchises enables it to form enduring relationships with audiences worldwide. That should enable it to buck the economic cycle by continuing to boost its revenue and earnings in the coming years. The company expects to deliver double-digit earnings growth for fiscal 2026 and 2027.

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2. Airbnb

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NASDAQ: ABNB

Airbnb

Today's Change

(-0.65%) $-0.95

Current Price

$145.03

Key Data Points

Market Cap

$87B

Day's Range

$144.32 - $146.69

52wk Range

$110.81 - $150.88

Volume

97.3K

Avg Vol

3.8M

Gross Margin

72.38%

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Airbnb (ABNB -0.65%) is a leading online vacation rental platform. While vacation demand tends to decline during a recession, Airbnb's platform should remain highly resilient. It's focusing on four key areas to drive consistent growth: improving its service, expanding into more regions, enhancing its offerings, and integrating AI into its app.

The company wants its app to be a lot like Amazon (AMZN +1.13%). 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 local tours. Airbnb also anticipates expanding into other areas, such as partnering with companies like grocery stores and cleaning services. The company's expansion strategy should enable it to continue growing even in a cyclical downturn in travel.

Airbnb's strategy is already paying dividends. Its revenue was up 18% in the first quarter of 2026 to $2.7 billion, driven by a 19% increase in gross booking value to $29.2 billion.

3. EPR Properties

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NYSE: EPR

EPR Properties

Today's Change

(-0.06%) $-0.04

Current Price

$62.17

Key Data Points

Market Cap

$4.8B

Day's Range

$61.50 - $62.34

52wk Range

$48.10 - $63.30

Volume

759.6K

Avg Vol

638.5K

Gross Margin

51.01%

Dividend Yield

5.79%

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EPR Properties (EPR -0.14%) is a real estate investment trust (REIT) focused on owning experiential real estate, including 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 is unlikely to have as significant an impact on EPR Properties as it would on other companies, given 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, as tenants cover all operating costs, including routine maintenance, real estate taxes, and building insurance. EPR pays out a conservative percentage of its steady cash flow via its monthly dividend. The REIT reinvests the remaining funds to acquire additional income-producing experiential properties. In early 2026, it closed the purchase of six regional theme parks from Six Flags (NYSE:SIX). They're part of a $342 million, seven-property deal that will see the REIT lease the properties to two new operators. Those investments will help grow its rental income, enabling the REIT to continue increasing its high-yielding dividend (a 5.1% increase in 2026).

4. Nucor

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NYSE: NUE

Nucor

Today's Change

(-2.48%) $-5.87

Current Price

$230.74

Key Data Points

Market Cap

$54B

Day's Range

$230.00 - $237.82

52wk Range

$131.32 - $270.90

Volume

1.5M

Avg Vol

1.6M

Gross Margin

13.98%

Dividend Yield

0.94%

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Steel producer Nucor (NUE -2.48%) tends to be highly cyclical since demand for steel ebbs and flows with the economy. When the economy is expanding, companies use more steel to construct buildings, cars, and other industrial goods. However, steel demand tends to decline during a recession.

While Nucor could eventually see a slowdown in steel demand, it's benefiting from increased infrastructure spending. The company's business has also proven more resilient than others in the steel sector over the years, as shown by its dividend. As of mid-2026, Nucor had paid 213 consecutive quarterly dividends. It has increased its dividend payments for 53 straight years -- every single year since it first paid dividends in 1973 -- qualifying it as a Dividend King, or a company with 50 or more years of annual dividend increases.

Cyclical vs. noncyclical stocks

Investors need to understand the key differences between cyclical and noncyclical stocks.

Cyclical stocks are companies with businesses tied to the economic cycle. A growing economy drives demand for their products or services, which, in turn, typically increases their revenue and profitability.

Noncyclical stocks are companies in more economically resilient industries (also known as defensive or recession-proof sectors). As a result, demand for their products or services tends to remain stable and continue growing during a recession.

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Examples of cyclical industries

Nearly any industry can have some cyclicality, but these eight are among the most prominent:

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 that primarily sell essential goods are less cyclical, especially when they prioritize discounts. Walmart (NYSE:WMT) can be considered countercyclical, as its sales often increase during tough times.
Restaurants: During economic downturns, people eat at home more often than 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, banks' profitability 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, which can shrink bank profit margins.
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 these industries are part of the consumer cyclical sector: discretionary goods and services that aren't strictly necessary purchases. Consumer cyclicals break down into durable goods (long-lasting items such as vehicles) and nondurable goods (clothing and prepared foods).

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Examples of noncyclical industries

Some businesses hold up well no matter where the economy is in its cycle. The most prominent defensive sectors include:

Nondiscretionary retail: Grocery stores, drugstores, and big-box retailers selling everyday necessities tend to be resilient even in deep recessions.
Utilities: Consumers generally keep paying their electric and water bills regardless of economic conditions.
Defensive real estate: REITs focused on medical offices or necessity retail tend to hold up better than those invested in hotels or timberland. That said, the entire real estate sector is sensitive to interest rates -- rising rates weigh on values, while falling rates provide a tailwind.

It's worth noting that even defensive stocks aren't entirely recession-proof. In severe downturns, investors sometimes rotate out of equities entirely into bonds and cash, which can weigh on even the most stable stocks.

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How Cyclical Stocks Respond to Economic Changes

Cyclical stocks benefit when the economy expands, as that drives growing demand for their products and services. That enables them to expand their operations to capture this growth, boosting their earnings and stock prices and increasing their ability to return cash to investors via dividends and share repurchases.

However, when the economy slows, demand for economically sensitive products and services also slows. That impacts their financial results, leading to a decline in their stock prices. Cyclical companies often respond to these changes by reducing their workforce, cutting capital spending, and, in some cases, reducing the amount of cash they return to shareholders.

Benefits and risks of investing in cyclical stocks

Cyclical stocks have their pros and cons. Some of the advantages of investing in cyclical stocks include:

Benefiting from economic growth: Cyclical companies tend to see increased demand for their products and services as the economy expands.
Potential inflationary hedge: Cyclical companies can help you hedge your portfolio against inflation when consumer spending is rising.
Income: Many cyclical stocks pay dividends, which can be higher during periods of economic growth.

Meanwhile, some of the risks of investing in cyclical stocks include:

Variable earnings: The profitability of cyclical companies tends to ebb and flow with the economic cycle.
Dividend cuts: Cyclical companies are more likely to cut dividends during an economic downturn.
Financial issues: A severe economic downturn can cause significant financial problems for some cyclical companies.

What to look for in a cyclical stock

Investors should look for a few things when investing in a cyclical stock:

Balance sheet strength: The company should maintain a strong investment-grade balance sheet with low leverage relative to peers. This will enable a cyclical company to rely on its balance sheet to navigate through the low point of the economic cycle.
Durable competitive advantages: Look for a company that has notable competitive advantages over rivals, such as brand power, low-cost operations, and strong customer relationships. It can use its competitive advantages to take market share during an economic downturn.

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How to invest in cyclical stocks

Here's a step-by-step guide on how to invest in cyclical stocks:

Open your brokerage app: Log in to your brokerage account where you handle your investments.
Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
Submit your order: Confirm the details and submit your buy order.
Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.

Strategies for Investing in Cyclical Stocks

Here are some practical tips for investing in cyclical stocks:

Increase your portfolio's exposure to cyclical stocks during the economic cycle's trough and expansion phases.
Consider reducing your exposure to cyclical stocks as the economy slows.
Pair cyclical stocks with more defensive holdings.

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FAQ on cyclical stocks

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About the Author

Matt DiLallo has been a contributing Motley Fool stock analyst specializing in the energy, industrials, and real estate sectors since 2012. He also covers dividend-paying stocks, pre-IPO companies, ETFs, and other investing topics. He holds an MBA from Liberty University.

TMFmd19

@MatthewDiLallo

JPMorgan Chase is an advertising partner of Motley Fool Money. Matt DiLallo has positions in Airbnb, Amazon, Apple, Coca-Cola, EPR Properties, JPMorgan Chase, NextEra Energy, Realty Income, and Walt Disney and has the following options: short March 2026 $125 calls on Walt Disney and short May 2026 $280 calls on Apple. The Motley Fool has positions in and recommends Airbnb, Amazon, Apple, Boeing, Costco Wholesale, EPR Properties, JPMorgan Chase, NextEra Energy, Realty Income, Texas Roadhouse, and Walt Disney. The Motley Fool recommends General Motors. The Motley Fool has a disclosure policy.

Best Cyclical Stocks to Buy in 2026: Everything Investors Need to Know

Key Points

What is a cyclical stock?

Top cyclical stocks to consider

1. The Walt Disney Company

Key Data Points

2. Airbnb

Key Data Points

3. EPR Properties

Key Data Points

4. Nucor

Key Data Points

Cyclical vs. noncyclical stocks

Examples of cyclical industries

Examples of noncyclical industries

How Cyclical Stocks Respond to Economic Changes

Benefits and risks of investing in cyclical stocks

What to look for in a cyclical stock

How to invest in cyclical stocks

Strategies for Investing in Cyclical Stocks

Related investing topics

Best Bank Stocks for Dividends in 2026 and How to Invest

Best Automotive Stocks for 2026 and How to Invest

Best Growth Stocks to Buy in 2026

Best Travel and Tourism Stocks for 2026 and How to Invest

FAQ on cyclical stocks

Are cyclical stocks suitable for long-term investors?

Are cyclical stocks suitable for long-term investors?

Is Amazon a cyclical stock?

Is Amazon a cyclical stock?

Do cyclical stocks pay dividends?

Do cyclical stocks pay dividends?

Are cyclical stocks a good hedge against inflation?

Are cyclical stocks a good hedge against inflation?

Is there an ETF for cyclical stocks?

Is there an ETF for cyclical stocks?

Can cyclical stocks be part of a retirement portfolio?

Can cyclical stocks be part of a retirement portfolio?

How often should I review my cyclical stock investments?

How often should I review my cyclical stock investments?

About the Author

Read Next

Stocks Mentioned

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Premium Investing Services

FAQ on cyclical stocks

Are cyclical stocks suitable for long-term investors?

Are cyclical stocks suitable for long-term investors?

Is Amazon a cyclical stock?

Is Amazon a cyclical stock?

Do cyclical stocks pay dividends?

Do cyclical stocks pay dividends?

Are cyclical stocks a good hedge against inflation?

Are cyclical stocks a good hedge against inflation?

Is there an ETF for cyclical stocks?

Is there an ETF for cyclical stocks?

Can cyclical stocks be part of a retirement portfolio?

Can cyclical stocks be part of a retirement portfolio?

How often should I review my cyclical stock investments?

How often should I review my cyclical stock investments?

What is a cyclical stock?

Best Bank Stocks for Dividends in 2026 and How to Invest

Best Automotive Stocks for 2026 and How to Invest

Best Growth Stocks to Buy in 2026

Best Travel and Tourism Stocks for 2026 and How to Invest

Key Data Points

Top cyclical stocks to consider

1. The Walt Disney Company

2. Airbnb

Examples of noncyclical industries

How to invest in cyclical stocks

Strategies for Investing in Cyclical Stocks

Related investing topics

Key Data Points

Key Data Points

Key Data Points

How Cyclical Stocks Respond to Economic Changes

Benefits and risks of investing in cyclical stocks

What to look for in a cyclical stock

When should you buy cyclical stocks?