It is undeniable that in today’s era, external factors, seasonal conditions And the overall economy continues to affect the company’s business. Whether it is reducing the number of products that can be produced or reducing the demand.
Due to the influence of the season and economic conditions There are two types of stocks you need to know: cyclical stocks and non-current stocks. What are cyclical and non-current stocks? And what are the advantages and disadvantages? Check out the following checks.
What is cyclical stock?
Cycle shares or stocks issued by companies whose business conditions are easily influenced by business cycles and the economy.
Generally, cyclical stocks are issued by companies producing higher education needs. so that when the economy deteriorates People will not buy these products.
Seasonal stock prices will fall if the recession occurs. and will improve when the economy improves Not often when the economy improves. The share price of this company has risen above the share price of other companies (new growth stock).
A simple example is a stock issued by a stock company in the aviation sector. When the economy is in decline and people are unable to travel by plane The operating results of the company will also decrease according to the company’s revenue.
Here are some examples of cyclical stocks:
- PT Media Nusantara Citra Tbk (MNCN)
- PT Matahari Tbk Department Store (LPPF)
- PT Surya Citra Media Tbk (SCMA)
- PT Erajaya Swasembada Tbk (ERAA)
- PT Ace Hardware Indonesia Tbk (ACES)
- PT Mitra Adiperkasa Tbk (MAPI)
- PT Astra Otoparts Tbk (automatic)
- PT MD Picture Tbk (FILM)
- PT Mitra Pinastika Mustika Tbk (MPMX)
- PT Gajah Tunggal Tbk (GJTL)
- PTT Garuda Indonesia (Persero) Tbk (GIAA)
- PT Indo Tambangraya Megah Tbk (ITMG)
- PT Aneka Tambang Tbk
What are non-current stocks?
Non-current stocks are those issued by companies whose business conditions are not easily affected by the seasons or the national economy. Therefore, these types of securities are generally referred to as defensive stocks.
Non-cyclical stocks are the opposite of cyclical stocks.
Typically, companies that produce basic necessities issue non-current stocks. So even though the recession will have many consumers buying these products. As a result, non-cyclical share prices tend to remain stable regardless of the conditions.
An example of a company of this nature is a company that produces agricultural materials such as fertilizers and pesticides. Even though the economy is in crisis But the products produced by this company are still necessary. especially farmers It is therefore not uncommon for growth to remain positive even in recession. And it may be that this type of company will receive government assistance because that plays an important role
Other sectors include consumer goods company Commodities in the form of food will continue to be bought by the community regardless of economic conditions.
Examples of non-current stocks include:
- PT Unilever Indonesia Tbk (UNVR)
- PT Indofood CBP Sukses Makmur Tbk (ICBP)
- PT Indofood Sukses Makmur Tbk (INDF)
- PT Japfa Comfeed Tbk (JPFA)
- PT Mayora Indah Tbk (MYOR)
- PT Nippon Indosari Corpindo Tbk (ROTI)
- PT Astra Agro Lestari Tbk (AALI)
- PT PT Ultra Jaya Milk Industry & Tradig Company Tbk (ULTJ)
- PT Sariguna Primatirta Tbk (CLEO)
- PT Buyung Poetra Sembada Tbk (HOKI)
- PT Sumber Alfaria Trijaya Tbk (AMRT)
- PT Garudafood Putra Putri Jaya Tbk (Good)
- PT Charoen Pokphand Indonesia Tbk (CPIN)
Pros and cons of cyclical stocks
from the above discussion It can be seen that one of the main advantages of cyclical stocks is that prices can rise above average when economic conditions improve and company performance is good too.
For example, ITMG shares can rise above 100% in a year. One of the reasons why ITMG’s share price has risen is the rise in global commodities prices after COVID-19. This value is much higher than the average increase in the entire industry. Because at the same time, the JCI, or average stock price movement in Indonesia, has only increased in the range of 13.8%.
The disadvantage is that in times of crisis The price of these types of stocks will fall very strongly. It is certainly still strong in the memories of Indonesians that Garuda’s share price continued to decline since early 2020 until it was finally suspended due to covid 19.
Pros and cons of non-current stocks
The advantage of non-cyclical stocks is that their price changes aren’t too drastic during a recession or after the economy has started to recover. Thus, the profits that traders and investors get from raising capital are not as high as cyclical stocks.
Let’s look at the example of Indofood CBP (ICBP). In December 2019 (before covid-19), the company’s share price was 11,450 per share, down to 7000 per share. Now the consumer goods company’s share price has risen to 9,425 per share, or It is down about Rp 2,000 per share compared to 1.5 years ago. Compared to JCI one year ago, ICBP’s share price increase is not too far off. Throughout July 2021-July 2022, JCI increased 13.8%, while owned by the Salim Group increased 10.8%.
Better cyclical or cyclical stocks?
Both cyclical and non-cyclical stocks have their own advantages and disadvantages. Therefore, you should choose between these two types of stocks according to your needs. investment style and risk
It can be said that the first type of stock tends to be more risky than the second type. This makes it ideal for aggressive investors or short term traders. on the contrary non-current stock (Second type) suitable for cautious and moderate investors as well as novice investors.