Is it fair to say that the state of the markets and the economy in 2020 is unprecedented and uncharted? Imagine that the economy went from strong gross domestic product and the lowest unemployment rate in decades to a period of unprecedented selling in the stock market, massive rate cutting and stimulus, surging unemployment and layoffs. At the start of the year, this was not what the charts (nor the tea leaves and chicken bones) were suggesting at all. Zoom forward about 75 days from the lows in March, and stocks have somehow surged and regained almost all their losses.

24/7 Wall St. has been tracking the moves ahead of and during the COVID-19 instant recession, and the current theme for the stock market has been how the “reopening and cyclical stocks” are now leading the way. Many other sectors are recovering as well, from travel and leisure to retail to housing. With America having been given a hard lesson about distant supply chains over the past 18 months or so, it’s time to look at some of the industry leaders and well-known cyclical companies again. Despite the snapback rallies since mid-March, there may still be more room ahead in some of the top cyclical names.

These are what some might even think of “base economy” stocks, because none of the buildings, industrial goods, manufactured goods and consumer products that are enjoyed all over the world could nor would ultimately exist without them. That said, none of these are consumer products companies as their primary operations.

Before looking for the next big great stocks to buy, note that the current market euphoria could easily have risen too far. It could be that the current enthusiasm may be too far ahead of itself or just misplaced. The stock market is a live-money voting pool full of trillions of dollars betting on how the economy will be six months or so down the road. As of the start of June in 2020, there is still a recession, there is still a widespread (yet dwindling) fear of the coronavirus, and the nation is facing civil unrest, with protests and demonstrations turning to violence in many locations.

Zero assurances can be offered up about the stock market. Now that the S&P and Dow Jones industrials have recovered the lion’s share of their losses (and the tech-heavy Nasdaq is challenging new highs), some investors still so far have not participated. Jumping in on days or weeks of huge gains comes with great risk of overpaying or getting in just in time for the next drop.

24/7 Wall St. has specifically looked at industry leaders and well-known companies in their sectors that are cyclical and would tie in with a “base economy” theme, and with shares that have not yet come close to their prior 52-week highs. We have showed how much they were up from their lowest daily closing price (not intraday lows) from March, and we have shown how far they would need to run to hit their 52-week high. We also have shown the latest data on the Refinitiv consensus analyst price targets to see if Wall Street thinks there is room to run or if they are feeling toppy again. Oh, and there are some charts to consider as well. There also has been a review of dividends in these selections.

Dow

Dow Inc. (NYSE: DOW) thinks of itself as a materials science solutions company, but let’s break it down as plastics, industrial chemicals and products, coatings and other segments within materials, and it caters to just about every product and industry that makes and consumes “widgets.” Dow’s share price was up 4.65% at $44.70 on Friday afternoon, up a whopping 100%-plus from the $21.61 low close that was seen on March 21. The drop from $40 to under $25 and to that low close only took seven trading days, proof enough of a panic selling frenzy. It took until May 27 for Dow to see $40 again, and it took until June 2 to close above $40 again.

Despite the doubling from the bottom, Dow’s stock price would have to rise 26% to hit the 52-week high of $56.25. The consensus price target was $38.57 ahead of this last move, and the bias from the analyst calls throughout May was overwhelmingly negative to cautious right into a major rally.

Huntsman

Huntsman Corp. (NYSE: HUN) was trading at $24.00 heading into 2020, but by the panic-selling nadir in March it was closer to $12. At $20.20 on Friday, shares had rallied 57% since the closing low of $12.87 seen on March 23. Friday was also its very first day to reach $20 since late in February. Huntsman would have to rally another 23% to hit its 52-week high of $24.90 after having been up at close to $35 at the start of 2018.

The consensus price target is only $19.61, and that is down from a consensus target of $24.00 earlier in the year. The chemicals company has a market cap of $4.5 billion, and its four units are Polyurethanes, Performance Products, Advanced Materials and Textile Effects.

Nucor

Nucor Corp. (NYSE: NUE) is a leader in steel, from mills to basic and advanced product uses to raw materials, with close to a $14 billion market cap. After nearly a 3% gain on Friday to $45.90, its stock price had risen 63% from its closing low of $28.08 on March 23. Its stock also would have to rise another 28% before it attacks its 52-week high of $58.70. Nucor’s prior peak was closer to $69 at the start of 2018.

The consensus price target is currently only $43.56, and most of the post-recession analyst calls have taken the price targets down rather than up. With how low the targets went around stock prices and some of the positive ratings maintained, some investors will be looking for analysts to raise their targets ahead.

PPG Industries Inc. (NYSE: PPG) is a global player in making and distributing paints, coatings and specialty materials for many applications throughout many industries. It is also rather large, with a $27 billion market cap, and it has a 1.8% dividend yield that should still be able to grow if the company maintains capital discipline. Despite sales and earnings taking a hit from its cyclical business nature in 2020, it is expected to recover in 2021 as the sales losses are projected to compress in 2020.

PPG recently traded at $115.00 a share. That is down from a 52-week high of $134.36, but it is up from a low close of $72.51 on March 18. During the selling panic in March, it only took six trading days to fall from $100 to the low, and it took until May 26 to get back to $100. Its stock price is currently above the $106.73 consensus price target. PPG would have to run 17% to challenge is highs again, and some investors might want to look at a five-year chart to see if the old $120 resistance level would be a major factor.

Sealed Air

Sealed Air Corp. (NYSE: SEE) is a leader in packaging, sealing and wrapping for foods and other products being shipped. It is known for bubble wrap in many shipping situations. The company ran into accounting issues in 2018, and it fired its chief financial officer in 2019 after an internal review and receiving a second U.S. Securities and Exchange Commission subpoena. It still has a $5.5 billion market cap and a dividend yield that should be very safe at about 1.8%. In fact, Sealed Air actually has room to improve its dividend as things normalize.

It now trades near $35.25 a share. The lowest closing price of $17.47 on March 18 did not last long. It had been a $30 stock as recently as March 5, before the real panic set in, but this stock rapidly recovered to $30 by April 9. It would have to run 30% before challenging its old highs, but its consensus target price was $35.75 on last look. Analysts had been lowering their targets on Sealed Air, but on May 28, Robert W. Baird maintained its Outperform rating and raised its target to $40 from $35. This was briefly a $50 stock as recently as 2015.

Weyerhaeuser

Weyerhaeuser Co. (NYSE: WY) is one of the world’s largest private owners of timberlands, with roughly 11 million acres in the United States and additional timberlands managed under long-term licenses in Canada. The company is a real estate investment trust (REIT), and in some ways could almost be considered a potential applicant to be the 51st state. It is among North America’s largest manufacturers of wood products.

With shares at $24.25, the 52-week trading range is $13.10 to $31.58, so it would have to run 30% before challenging its annual high again. Weyerhaeuser’s lowest of close of $13.47 on March 23 did not last long, and this had been a $30 stock as recently as February 24. The consensus target price is nearly $26, and as a REIT, it will want to pay dividends again after halting that payment in May.

And the Rest

Two additional companies also could be considered in this cyclical review. There were some exceptions in these two, hence shorter reviews. They likely would be given more favorable reviews on any real share price weakness.

Freeport-McMoRan Inc. (NYSE: FCX) has close to a $16 billion market cap and recently had better than a 3% dividend yield. The Arizona-based company operates globally in many mineral plays, and it has significant proven and probable reserves of copper, gold and molybdenum.

Westlake Chemical Corp. (NYSE: WLK) has a $7.5 billion market cap and is primarily in basic chemicals, vinyls, polymers and building products around the globe. It has a 1.8% dividend yield, but the peak earnings were back in 2017 and 2018, when the stock was above $100. Who knows whether the company can get back to where it was, but now at $58 a share, it was at $70 or so before the panic selling dragged it down. As with Freeport-McMoRan, Westlake probably would be given higher marks on pullbacks.

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We have included a six-month chart review from StockCharts.com showing each ticker and showing the Industrial Select SPDR Fund (NYSE: XLI) for a reference. At $75.75 a share, the exchange-traded fund has a 52-week high almost 15% higher at $85.33. Its lowest adjusted closing price was $48.77 on March 23, but that was the only trading day it closed under $50, and it had been at $80 on February 24.

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