Top 3 Best Cyclical Stocks to Own (2019 Review)

By definition, cyclical stocks rise and fall with the health of the overall economy. Therefore, the best cyclical stocks to own are those that will benefit the most from this year’s prevailing economic trends.

Last year’s stock market correction suggests economic growth will slow in 2019. That may be true, but unemployment remains low while wage growth is still high. As long as that remains the case, consumers will continue to spend.

However, exactly how that money is spent will determine this year’s stock market winners and losers. A year ago, e-tailing giant Amazon (NSDQ: AMZN) was considered a “must own” stock. But after many of its rivals reported big increases in online sales, Amazon has been struggling to gain ground with new customers.

How Do You Determine What Qualifies as the Best Cyclical Stocks to Own in 2019?

What are the trends that will drive stocks higher this year? Here are three that we believe will have the biggest impact on the economy in 2019:

  • Oil prices are low and likely to go higher as global demand catches up with supply.
  • Gold will surge in value as the U.S. dollar weakens and inflation picks up steam.
  • European stocks will benefit from a stronger Euro and final Brexit resolution.

Each of these trends has huge implications for the stock market. That’s because over the past several years it has operated under a very different set of financial conditions. The easy days of buying the mega-cap quintet of “FAANG” tech stocks are over, replaced by a new set of companies that do not neatly fit into a single theme.

Also see: “Top 3 Cheapest Marijuana Stocks to Buy Now

What are the Best Cyclical Stocks to Own in 2019?

If you’re in a hurry, below are our picks for the best cyclical stocks to buy now.

  1. Chevron: Higher output and lower costs will boost profits when oil prices rise.
  2. Barrick Gold: A weaker dollar and rising inflation could push gold prices higher this year.
  3. ABB Ltd: Shift towards digital products should widen profit margins.

Keep reading to find out more about each of the best cyclical stocks to own in 2019.

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Chevron (NYSE: CVX)

What is it?

Chevron was founded in San Francisco in1879 as the Pacific Coast Oil Company. Later, it was part of Standard Oil before getting spun off as an independent entity. Today, it is the third most valuable publicly traded energy producer in the world with a market cap in excess of $228 billion.

In addition to its exploration and production activities, Chevron is a refiner and retailer. That means it can remain profitable even when oil prices are low. In addition, Chevron is expanding its alternative energy portfolio to include solar, wind, and biofuel.

Why is it one of the Best Cyclical Stocks to Own in 2019?

In 2018, Chevron earned $14.8 billion in profits during a period of declining oil prices. The company expects oil and gas production to increase 4% – 7% in 2019. At the same time, it has reduced production costs by 50% over the past four years. Combined with rising oil prices this year, Chevron could produce record profits in 2019.

And when Chevron is profitable, it rewards its shareholders. In 2018, the company paid out $8.5 billion in cash dividends and repurchased $1.7 billion of its stock. This year, Chevron intends to raise its quarterly dividend by 6% and repurchase at least another $1 billion of stock. With a dividend yield of 4%, Chevron is one of the few businesses that is equally appealing to growth and income investors alike.

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Barrick Gold (NYSE: GOLD)

What is it?

Barrick Gold is based in Toronto, Canada and employs over 10,000 people on four continents. Barrick operates gold and copper mines all over the world. In 2017, 53% of Barrick’s production came from North America, 25% from Africa, 13% from South America, and 9% from the Australia-Pacific region. Gold mining technology has not changed much over the past hundred years, as explained in this video:

Due to its recent merger with Rangold Resources, Barrick will control half of the world’s 10 highest-rated gold producing properties. In addition, Barrick recently entered into a cross-ownership agreement with China’s state-owned Shandong Gold Group, with which it jointly owns and operates a mining facility in Argentina.

Why is it one of the Best Cyclical Stocks to Own in 2019?

There are three reasons most investors own gold, and this year all of those rationales are likely to pan out:

  • Gold is widely viewed as a hedge against inflation even though its track record as such has been inconsistent.
  • Second, gold is still used by many wealthy investors as protection against a weakening dollar.
  • Third, gold is perhaps the only commodity that is universally regarded as a store of value since there is so little of it.

We believe all three of those factors will line up this year, making Barrick one of the best cyclical stocks to own in 2019.



What is it?

ABB is an industrial automation conglomerate headquartered in Zurich, Switzerland. Its 147,000 employees manufacture and sell products to customers in more than 100 countries. Its customers operate in 23 industries including automotive, oil & gas, and food & beverage.

The company sells products through four divisions: power grids, electrification, industrial automation, and robotics and motion. Its revenue stream is well diversified with 35% of its sales in Europe, 31% in the Americas, and 34% in Asia, the Middle East, and Africa.

Why is it one of the Best Cyclical Stocks to Own in 2019?

Recently, ABB shifted its focus away from its traditional power grid business towards digital automation. The company believes that will result in greater scalability and less dependence on large hardware orders to sustain growth. ABB estimates that it will receive roughly $7.7 billion in net cash proceeds from the sale of 80% its power grids assets to Hitachi.

The company has stated that it will return 100% of the net cash proceeds to its shareholders via share repurchases or a special dividend. It has also stated its intention to maintain the current level of its cash dividend, which yields close to 4%. The combined value of all those cash payments to ABB’s shareholders should make it one of the best cyclical stocks to own in 2019.


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