Revisiting a cyclical screen: turnaround opportunities?

Back in May 2023, I explored a subscriber request to create a screen to look for stocks in cyclical and sensitive sectors that might be about to see an upturn.

It turned out to be an interesting task. I drew on ideas from famed investors Jim Slater and Peter Lynch, as well as my own views on what factors might be worth highlighting.

In short, I wanted to find companies whose profitability was below historic average levels, but which were attractively valued and showing signs of a return to earnings growth.

Here’s a snapshot of the rules I created for my Cyclical Sectors Turning Up? screen:

You can read the original article here, including a detailed explanation of the screening rules I chose to use.

Fast forward 20 months and the market environment has changed somewhat. Interest rates appear to have peaked, geopolitical events continue to happen, and the FTSE 100 is trading at record highs.

I thought it would be interesting to revisit this screen to see:

• How the stocks I highlighted in May ‘23 have performed;

• Which companies and sectors feature most heavily in the results today.

How has the screen performed?

Back in May 2023, a total of 33 stocks qualified for my screen. I’ve put them all in a table below, with the individual share price gain for each stock over the period.

On average, these shares have gained 21% over the 20 months since May 2023. That’s nearly twice the 12% gain recorded by the FTSE 100 over the same period:

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