By Jacob Sonenshine

If the market is truly ready to continue its bull run, stocks that are most sensitive to the economy, or "cyclicals," will certainly participate.

The S&P 500 is up about 10% from the bottom of its Iran War-driven decline. The market apparently sees enough evidence that President Donald Trump wants to avoid a long and destructive war, that oil prices have already peaked, and that any resulting inflation will be short term.

That sets the stage for one of the most important elements of any bull market: a Federal Reserve that won't stand in the way of stocks. If the Fed believes the mildly higher inflation from what is still an elevated price of oil will prove "transitory," it probably will not raise interest rates.

If inflation ultimately falls back to the Fed's 2% goal, it could cut rates, especially if it wants to prioritize the labor market, which has weakened a bit recently. Lower rates take some time, often more than a year, to have their positive impact on consumer and business demand, so the economy could expand moderately over this year and into 2027.

The point is that there's plenty of money availability on the way for the economy to continue to grow -- and that can keep corporate earnings and the stock market moving higher.

In this scenario, cyclical stocks should perform well. Those include many consumer companies, credit card companies, and banks, which make more loans and conduct more corporate transactions when economic demand is growing. Others are transportation companies within the industrials sector and manufacturers, which make more equipment when the economy expands.

That's why Mike Wilson, Morgan Stanley's chief U.S. equity strategist, screened for consumer, financial and industrial names that investors can own. He looked for those that the bank's analysts rate Overweight and that are still 10% or more below their record highs. That last piece is in place to avoid stocks that have gathered too much momentum and are vulnerable to disappointments, whether on earnings or macroeconomic data points.

Wilson published this list Monday morning, before the market gained, so we'll show only the names that remain at least 10% below their highs.

Stocks that fit the bill: AutoZone, AutoNation, Carvana, O'Reilly Automotive, Home Depot, Ally Financial, insurance and other financial services provider Aon PLC, insurance broker Arthur J. Gallagher & Co., MetLife, S&P Global, Visa, Truist Financial, United Rentals, Uber Technologies, transportation and logistics company Werner Enterprises, and GXO Logistics.

Another is Mastercard. The stock is down 14%, largely because of concerns that stablecoins could eat into its market share by facilitating cross-border payment transactions.

That makes it look cheap. It now trade at 25 times analysts' expected earnings for the coming 12 months, just a few points above the S&P 500's 21 times; it has sometimes traded at a 14-point premium in the past three years.

The stock deserves to trade more richly versus the market, given that management is doing what it can to maintain the type of growth the market is accustomed to. The company just bought a stablecoin company in an effort to keep its offerings current -- and competitive. The company hasn't missed quarterly sales or earnings estimates once in at least the past 20 quarters, helping analysts lift 2026 sales and earnings projections since the start of this year.

For the past decade, sales have grown 12% annually, according to FactSet, as global consumer spending has increased and many countries are still in the midst of moving away from cash and into cashless payments. This year, analysts forecast another 13% growth to $37 billion.

That can lift earnings per share by 15%, as the company uses its high profit margins and over $18 billion of expected free cash flow to buy back shares. These are the types of results that the company has proven it can achieve -- especially as it protects its competitive position.

Anyone who believes in this market can believe in this basket of stocks.

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

April 15, 2026 11:46 ET (15:46 GMT)

Copyright (c) 2026 Dow Jones & Company, Inc.