3 High-Quality Cyclical Stocks to Buy for the Long-Term

NYSE: NUE | Nucor Corp. News, Ratings, and Charts

NUE – Inflation is one of the biggest threats facing the economy. One profitable strategy during this period of high inflation is to focus on stocks that have pricing power, as these companies’ margins will continue to expand. In contrast, stocks without pricing power are likely to underperform as margin compression erodes EPS. Therefore, investors should consider buying these 3 stocks that are thriving in this inflationary environment: Olin (OLN), Nucor (NUE), and Chemours (CC).

Inflation is one of the biggest threats facing the economy, although there is increasing evidence that it is rolling over. We can see this by looking at commodity prices or weakness in economic reports.

As long as the economy is slowing, cyclical stocks are likely to underperform. Therefore, investors who are interested in this sector need to be even more selective when it comes to stock picking and should consider a dollar-cost-average method to take advantage of continued volatility.  

One profitable strategy during this period of high inflation is to focus on stocks that have pricing power, as these companies’ margins will continue to expand. In contrast, stocks without pricing power are likely to underperform as margin compression erodes EPS. Therefore, investors should consider buying these 3 high-quality, cyclical stocks: Olin (OLN), Nucor (NUE), and Chemours (CC).

Olin (OLN)

OLN produces and sells chemical products in the United States, Europe, and globally. It operates in three segments: Chlor Alkali Products and Vinyls; Epoxy; and Winchester. The company markets its products through its sales personnel as well as directly to various industrial clients, mass merchants, retailers, wholesalers, other distributors, and the United States Government and its prime contractors.

OLN is a great pick for an inflationary environment because its chemicals are used in all sorts of industrial processes. This gives it pricing power as its customers have no choice but to accept higher prices. Further, OLN has a dominant market share in many categories which means that it’s benefitting from a strong industrial recovery. 

Another indication of its strength is found in its recent earnings report with the major highlight being the company’s authorization of a $1 billion buyback. It also saw a 63% year-over-year increase in revenue. Net income had a major turnaround going from a loss of $736.8 million in last year’s Q3 to a profit of  $390.7 million this year. 

Its outlook remains bright as analysts are expecting the company’s full-year EPS to reach $8.64 which implies a forward P/E of 5.7. EPS should also get another lift from the buyback program which is accretive by about 12%. 

OLN’s POWR Ratings reflect this promising outlook. The company has an overall A rating, which translates to Strong Buy in our proprietary rating system. A-rated stocks have posted an average annual performance of over 30%. To see the complete POWR Ratings for OLN, click here.

Nucor (NUE)

NUE operates through three segments: Steel Mills; Steel Products; and Raw Materials. Its Steel Mills segment produces hot-rolled, cold-rolled, sheet piling, plate steel, and bar steel products. Its Steel Products segment provides hollow structural section steel tubing products, cold finished steel products, and wire and wire mesh products. Its Raw Materials segment produces direct reduced iron (DRI) and brokers ferrous and nonferrous metals.

NUE has been posting record results in terms of sales, earnings, and free cash flow. This hasn’t stopped Wall Street from punishing the stock as it’s down by nearly 40% since late-April. However, the company has a very strong balance sheet and has a P/FCF in the mid-single-digits.

Last quarter, NUE had revenue growth of 49.5% to reach $10.49 billion, topping analysts estimates of $10.1 billion. It also saw EPS growth of 125%. For the full year, analysts are forecasting $42.3 billion in revenue and $26.62 in EPS which correlate to 15% and 12% growth, respectively. It also makes NUE substantially cheaper than the S&P 500 with a forward P/E of 9.

NUE’s POWR Ratings reflect this promising outlook. It has an overall grade of B, which equates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting. NUE has a B grade for Growth and Quality. Within the A-rated Steel industry, it is ranked #11 of 33 stocks. To see additional POWR Ratings (Value, Momentum, Stability, and Sentiment) for NUE, click here.

Chemours (CC)

CC is a manufacturer and distributor of performance chemicals. The company is based in Wilmington, Delaware and is a spinoff of Dupont. It operates all over the world and has four major units: Titanium Technologies; Thermal & Specialized Solutions; Advanced Performance Materials; and Chemical Solutions.

Like OLN, CC will benefit from an inflationary environment as its chemicals are inputs for all types of products. However, one of its largest revenue sources is titanium dioxide which is a key ingredient for white paint. Therefore, CC is also connected to the housing industry.

Housing is one of the strongest parts of the economy, and there is no stopping its momentum due to favorable supply and demand dynamics. On the supply side, there are only about 300,000 homes listed for sales in the whole country. Additionally, demand is strong with 30% of Millennials interested in buying a home in the next few years which is a sharp increase from 17% last year. In part, this is a reflection of the strong labor market, rising wages, low rates, and strong household balance sheets. Such strong fundamentals also mean it’s likely we will see more home improvement and renovation projects which will also benefit CC. 

These positive fundamentals were also reflected in CC’s recent earnings report which showed a 36% increase in revenue to $1.7 billion. The company’s gross profit increased 66.1% to $427 million, and net income surged 181.6% to $214 million. Overall, EPS grew by 176% to $1.27. 

The company’s momentum is expected to continue with projections for $4.11 in full-year EPS, more than double last year’s figure. It also means shares are remarkably cheap with a forward P/E of 7.6 and a dividend yield of 2.9%.  

CC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The POWR Ratings also evaluates stocks by various components to give investors additional insight. The stock has an A for Quality which makes sense considering that Wall Street has a consensus price target of $43.29, implying 30% upside from current levels. Click here to see CC’s full POWR Ratings.

What To Do Next?

If you’d like to see more top growth stocks, then you should check out our free special report:

9 “MUST OWN” Growth Stocks

What makes them “MUST OWN“?

All 9 picks have strong fundamentals and are experiencing tremendous momentum. They also contain a winning blend of growth and value attributes that generates a catalyst for serious outperformance.

Even more important, each recently earned a Buy rating from our coveted POWR Ratings system where the A rated stocks have gained +31.10% a year.

Click below now to see these top performing stocks with exciting growth prospects:

9 “MUST OWN” Growth Stocks


OLN shares fell $0.99 (-2.03%) in premarket trading Tuesday. Year-to-date, OLN has declined -15.26%, versus a -7.39% rise in the benchmark S&P 500 index during the same period.


NUE shares were unchanged in after-hours trading Wednesday. Year-to-date, NUE has declined -6.48%, versus a -18.71% rise in the benchmark S&P 500 index during the same period.


About the Author: Jaimini Desai


Jaimini Desai has been a financial writer and reporter for nearly a decade. His goal is to help readers identify risks and opportunities in the markets. He is the Chief Growth Strategist for StockNews.com and the editor of the POWR Growth and POWR Stocks Under $10 newsletters. Learn more about Jaimini’s background, along with links to his most recent articles. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
NUEGet RatingGet RatingGet Rating
OLNGet RatingGet RatingGet Rating
CCGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


:  |  News, Ratings, and Charts

Stocks Racing to Bottom

The S&P 500 (SPY) has raced 15% lower in just a few short weeks. Sure we might see a short term bounce here or there. Unfortunately most signs still point lower. Why is that the case? How much lower could we go? And what is the best way to trade this market? 40 year investment veteran Steve Reitmeister provides the answers in his new market outlook below...

:  |  News, Ratings, and Charts

2 Stocks Under $50 Worth Snapping up Right Now

With the market volatility and odds of recession perpetually increasing with every interest rate hike by the Federal Reserve, investors would be advised to load up on attractively priced stocks of businesses with robust demand and stable growth trajectory. Hence, fundamentally sound stocks Kroger (KR) and APA (APA), currently trading under $50, could be ideal investments. Keep reading…

:  |  News, Ratings, and Charts

3 Stocks You'll Want to Leave out of Your Retirement Portfolio

The stock market is experiencing wild swings amid the consecutive Federal rate hikes and deteriorating investor sentiments. Moreover, the aggressive rate hikes are raising recession concerns. Therefore, fundamentally weak stocks Uber Technologies (UBER), Workhorse Group (WKHS), and AppHarvest (APPH) might be best avoided for your retirement portfolio. Also, these stocks do not pay dividends. Read on…

:  |  News, Ratings, and Charts

The Worst Stock to Buy During Times of High Inflation

Rent the Runway (RENT) is slated to cut its workforce by 24% in the face of declining consumer spending amid soaring prices. Its subscriber count dropped in the last quarter. The stock has lost more than 70% year-to-date. Given the stubbornly high inflation, RENT might be best avoided. Keep reading…

:  |  News, Ratings, and Charts

3 Stocks You'll Want to Leave out of Your Retirement Portfolio

The stock market is experiencing wild swings amid the consecutive Federal rate hikes and deteriorating investor sentiments. Moreover, the aggressive rate hikes are raising recession concerns. Therefore, fundamentally weak stocks Uber Technologies (UBER), Workhorse Group (WKHS), and AppHarvest (APPH) might be best avoided for your retirement portfolio. Also, these stocks do not pay dividends. Read on…

Read More Stories

More Nucor Corp. (NUE) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All NUE News