Is there a (possibly dangerous) consensus on cyclical sectors? Peter Lynch felt that low PE was a false positive for cyclicals (and that low PBV was a better value indicator). However, he also looked for a fall in interest rates to precede the end of the recession, so that is problematic too, given current rates.
There is a nice summary of the classification here: https://en.wikipedia.org/wiki/Thomson_Reuters_Business_Classification
Anyway I'm seeking to improve value screens by taking account of cyclical/defensive/financial categorization and would like to understand how people use sectors, if at all. It is possible that other screening criteria excludes sectors from consideration as nothing from that sector gets through ...
I think the sectors to exclude from PE/G based screens would then be:
Consumer defensives, Healthcare, Technology, Telecomms, Utility
For PTB screens the sectors to include would be:
Energy, Basic Materials, Industrials, Consumer Cyclicals
Financials I'm still thinking about. They might need their own screen.
P/e and peg do seem misused. I read a thread the other day where the commenter said that it can't be top of the cycle as p/e was low. As you say though it was a cyclical stock (house builder from memory) so the emphasis should be on sustainability of earnings.
