It’s been a challenging year for cyclical stocks on Wall Street as geopolitical uncertainty has severely disrupted consumer confidence, but the prospect of a brightening economic outlook in the US could drive these four cyclical stocks higher moving into the summer months.
As the tentative ceasefire in Iran causes more uncertainty across markets, it can be difficult for investors to look meaningfully towards cyclical stocks when inflation fears appear to be as strong as ever.
The S&P 500 slipped almost 8% in the four weeks following the flare-up of conflict between the US and Iran on February 28. One of the biggest causes for this downturn has been fears over the long-term impact of Iran’s closure of the Strait of Hormuz, which has sent Brent crude prices soaring in a way that could drive energy price inflation in the US over the long term.
Prior to the initial ceasefire agreement, the OECD reported that it anticipates the energy shock of the war will send inflation to 4.2% in a move that would be especially damaging to cyclical stocks and discretionary spending.
Because cyclical stocks are tied to the overall economic cycle, they require periods of economic expansion to experience meaningful growth.
But there are plenty of signs that the US economy can return to an expansive cycle once a resolution has been reached in the conflict in Iran.
One of the biggest signs of optimism was the news that American employers added 178,000 jobs last month, mounting an expectation-beating recovery from the loss of 133,000 jobs in February.
Impressively, the job gains were around three times the amount that economists had forecast and helped to lower unemployment to 4.3%.
The shock of the war in Iran has pushed inflation up 0.9% in March to 3.3% in a worrying move for investors, but with cyclical stocks already pricing in the fear of higher prices, there may be room to add some key players as a speculative option for growth when the conflict ends, and the Strait of Hormuz reopens.
In the eventuality that peace talks in Iran are concluded sooner rather than later, these three cyclical stocks are strong options to mount a fast recovery:
1. Airbnb
Holidays are one of the most appetizing cyclical spending habits of consumers, and with the summer months fast approaching, a de-escalation of tensions in the Middle East could inspire more global users to push on with their vacation ambitions and book more stays.
“Given that Airbnb is currently rolling out an ‘AI-native experience’ for its users that’s intended to significantly enhance the user experience for its 275 million customers worldwide, the clearing economic outlook in the US would be a major catalyst for growth,” said Iván Marchena, Senior Economist at global brokerage brand Just2Trade.
“Although its AI integrations may not be fully ready to go this year, they certainly make the stock an intriguing choice looking ahead, and a price target of $175 would be achievable depending on the timing of its rollout.”
2. Walt Disney
There’s no getting away from the value generated by Disney Experiences. In the quarter ended in December 2025, experiences generated a record-breaking $10 billion in revenue, amounting to a 6% year-over-year increase. The figure is the equivalent of around 38% of the parent company’s total revenue.
Critically, Disney Experiences was responsible for 70% of the firm’s operating income, making it a key profit driver for the company.
3. Adient
Adient’s market share stands at around 18.14% and is an automotive mainstay that may be well-positioned to benefit from the ongoing transition from petrol to electric vehicles (EVs) in a move that could drive a renewed long-term emphasis on seating comfort as more autonomous driving features become commonplace.
Morningstar’s fair value for the stock has been priced at $67 per share, a ratio that’s 61% below its current price, highlighting plenty of room to run.
The Cyclical Stock Revival
While plenty has been made of the implications of the energy price shock on Wall Street since the flare-up of conflict in Iran began, investor fears have created an opportunity for picking up cyclical stocks on the expectation that pricing pressures won’t cause lasting damage to the US economic landscape.
Strong jobs data show resilience in the US economy, and picking up some underpriced cyclical stocks could be an excellent long-term play for investors looking to anticipate a return to optimism as the summer months get into gear.
Disclosure: On the date of publication, Dmytro Spilka did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer. Dmytro Spilka does not intend to make a trade in any of the securities mentioned above in the next 72 hours.
Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.
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