It's been many years since I read Beating the Street, but I remember one piece of wisdom regarding cyclical stocks. In cyclical industries a well-run company will weather market downturns, seeing their business rebound when the market swings upward. However a well-run company that also manages to gain market share during the downturn will be in position for much faster growth on the market's upswing. Lynch gave a numerical analysis showing how this works and Applied Materials' stock subsequently reflected this effect during the 90s.Here's a question I'm working on, and inviting comment: Who's gaining market share in the housing industry, which is now in a downturn? Might be too soon to tell, but it's definitely not too soon to investigate!
Don't know, but I'd maybe look for companies with more cash than debt and good FCF (two other things Lynch always sniffs before acting). They'd likely be in a position to acquire more market share during the downturn, thus being poised for the rebound.
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