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Quarter-End Insights

Our Outlook for Consumer Cyclical Stocks

Amid signs of economic stabilization, several yellow caution flags still wave for the consumer cyclical sector.

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  • Signs of economic stabilization are encouraging, but there are still several reasons for caution.
  • SG&A leverage will be additive, but we anticipate reduced margin expansion from consumer cyclical firms this year due to price competition, infrastructure and supply chain investments, and persistent raw material inflation.
  • Large cash stockpiles and subsequent share repurchase programs still set the stage for earnings outperformance.


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R.J. Hottovy does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.