What is the right course of action?

You answered correctly. At a stop sign, you must always stop completely at the stop line and yield to all cross traffic and cyclists before proceeding. In this scenario, you need to wait at the stop line and allow the cyclist, who has priority, to go first. You are not allowed to turn before the cyclist passes. This respects the right of way rules and ensures safety at intersections. If you face a stop sign, always stop, look, and give way to anyone already crossing, including cyclists.