The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.By Dave Sterman NEW YORK ( StreetAuthority) -- Although the U.S. economy has recently been on an unpredictable path, get ready to see more typical economic patterns take root. The economy is just get its footing now and should be a bit better in 2013. And, if history is any guide, it will have practically recovered by the middle of this decade. To be sure, a lot of companies are still speaking of challenging industry conditions, but remember that "investors always look ahead." So they will soon start buying up companies that tend to really benefit when the economic cycle is in a clear upward phase. Smart investors will want to begin looking at these stocks now.
Tricky to ValueAt first blush, these cyclical stocks may not seem especially cheap relative to the rest of the market. They have to sport medium- to large-P/E ratios on near-term results, but need to be valued against what they might earn when the economy is on strong footing, known as "peak-cycle profits." These stocks rarely trade for more than 10 times peak-cycle earnings, so several bargains abound when using this yardstick.
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