Course 408: Cyclical Stocks
How Has the Stock Performed?
In this course
1 Introduction
2 How Is the Company Doing Now?
3 How Wildly Do Sales and Profits Fluctuate?
4 How Leveraged Is the Balance Sheet?
5 Does the Company Consistently Generate Positive Cash Flow?
6 How Steady Are the Company's Dividends over a Cycle?
7 Is the Firm Diversified Geographically and by Product Line?
8 Is the Long-Term Trend in Sales and Profits Upward?
9 How Has the Stock Performed?
10 How Expensive Is It?
11 How Expensive Is the Company Based on Normalized Earnings?
12 How Does the Price/Sales Ratio Compare with Historical Levels?
13 Conclusion: Get 'Em while They're Cold

Cyclicals can post tremendous stock returns--but they usually come in bursts. Because of United Technologies' surging earnings since 1992, the tremendous returns have predominated lately. United Technologies' shares more than tripled in value between 1994 and 1999, and they beat the S&P 500 index in three of five years during that time. Within the transportation-equipment industry, too, United Technologies' stock has excelled, ranking in the industry's top quintile for the trailing one-, three-, and five-year periods ended December 31, 1999.

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