The Cyclical Stuff
I started with the “safe”, or “risk off” part of the portfolio.
Restaurant Brands, Sysco, Pepsi, Tyson, Kinder Morgan, Alexandria, and Rayonier. That is 7 stocks, or about 30% in conservative stocks.
Now let’s get to the more exciting stuff. The cyclicals:
RXO - RXO - $15 - brokers will gain share in a boom
Teck Resources - TECK - $33 - great risk/reward, the big guys are lurking, some short-term operating problems, and some China risk
Steel Dynamics - STLD - $126 - the built the first US aluminum mill in 50 years
Brunswick - BC - $60 - boat buying has stabilized, retailers order this Fall for next Spring
Middleby - MIDD - $130 - restaurants need new equipment, but the restaurant business is tough right now
Thor - THO - $101 -great market share in big RV's, a little worried about financing
Gentex - GNTX - $27 - auto parts are miserable right now, tariff issues,
Chart Industries - GTLS - $199 - agreed to be acquired by Baker Hughes, looking for a replacement
Materials, Industrials, plus Consumer Cyclicals are about 40% of the average mid-cap value fund, so I am roughly market weighted.
The cyclical contenders in order:
Columbia Sportswear - COLM - $51 -great products, but tariff confusion
Oxford Industries - OXM - $43 - tariff issues, is Tommy Bahama a fad?
Etsy - ETSY - $66 - hate to chase, up from $40
WillScott -WSC - $24 - temporary buildings, pods, interesting
Yeti Holdings -YETI - $34 - drink holders are a hit, tariff issues
SAIA/Schneider/Werner - SAIA - $301 - who is the second best trucker?
Paccar - PCAR - $99 - maybe the one truck builder is better?
Celanese - CE - $41 - just keeps getting worse, but the business is real, China issues
CarMax -KMX -$57 - worried about the credit business, great operations
American Eagle - AEO - $13 - tariff issues, but SS is cute
Nucor - NUE - $141 - the 2nd best steel maker
Quaker Chem. - KWR - $143 - steel making chemicals?
Jacobs - J - $150 - building big infrastructure projects
Hudbay Minerals - HBM - $10 - some exposure to US production
Trinity - TRN - $29 - the leasing business scares me
Polaris - PII - $55 - great products, tariff issues
Norwegian Cruise - NCHL - $24 - missed the bottom, hate to chase, up from $15
Choice Hotels - CHH - $120 - not much capacity being added
Mohawk -MHK - $126 - carpet and flooring, well managed, maybe better than the homebuilders
PulteGroup - PHM - $122 - my favorite homebuilder, exposure to 55+ communities
Louisiana Pacific - LPX - $96 - cool story, buying back lots of stock
Arhaus - ARHS - $12 - modern furniture
Lucky Strike - LUCK - $10 - bowling rollup
Alaska Air - ALK - $56 - great young fleet, too much California exposure?
Knife River - KNF - $93 - Dakota cement, spin of MDU Resources
I feel like should I own more of this sector. The BBB was a godsend to capital spending, but it is hard to find the right stock to exploit this new trend.
Can you grow an economy with a very weak consumer? Can the banks really go through a cycle with almost no credit issues? Can the tariff issue get any more complicated? What will Big Don do next? Will the “momentum” trade ever end?
Will I ever run out of things to worry about? Maybe I am a “panican”?
Today is the 43rd anniversary of Ronald Reagan signing the “Kemp-Roth” tax cut into law. Western civilization was saved. Damn am I old.
The similarities to today are so great, it is eerie. Just 16 months before signing, Reagan had almost been assassinated, Trump had 14 month from his shooting to the BBB signing. The traditional Keynesians were sure inflation would return in 1982. The were dead flat wrong for 40 #%$^&#@# years. It will take some “muscle memory” to build factories rather than buyback stock.