I have always invested in hyper-growth/momentum companies, so I have no clue as to how to value or invest in cyclical companies.
But i do know that it can be very profitable to do so.
Was wondering if someone with experience can give me a basic idea of what metrics etc they look at, what they are looking to figure out.
Look at your average return on equity or return on assets over the cycle (up and down). Look at average margins too. Make sure nothing massive has changed in the competitive landscape (supply/demand/etc). If it is well below the average and from a macro looks like its down cyclically, then it may be a good time to buy.
caveat: careful with leveraged cyclicals, they might not make it through downturn in the cycle.
Seasonal ARMA
Discounted cash flow Monte Carlo with the volatility included in the scenarios.
shiller ratio then use long term cagr to account for where the normalize earnings should be.