Finding the Right Stocks and Sectors

We’ll explore how these overarching trends are currently shaping the market, from the rise of sustainability to the proliferation of smart home devices. Royston Yang has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Atlassian, Chipotle Mexican Grill, and Coupang.

So although energy vastly underperformed the S&P 500 in 2020, the sector turned around and produced the highest returns since then. Companies in the health care sector provide medical services, make medical equipment, research money management forex and produce pharmaceuticals, sell health insurance, and otherwise facilitate health care for individuals. Despite dips in the stock market over the past three years, health care sector gains outpaced those of the S&P 500.

Understanding Sectors Can Help You Invest

Warren Buffett famously made a bet on the S&P500 that the market index would beat the returns generated through active investing by hedge fund managers. To no surprise, Warren Buffett came out as a winner as no hedge fund was able to beat the market from the period of January 1, 2008, to December 31, 2017. This was well-needed after the banking crisis that started off the year and rocked the financial sector. You know them as Verizon, AT&T, T-Mobile, Sprint, Comcast, Charter, Netflix, Facebook, and Google.

Leggate says Occidental is still in the early innings of a long-term recovery that he believes could accelerate in 2022 in a favorable energy market environment. Bank of America has a “buy” rating and a $50 price target for OXY stock, which closed at $29.23 on Dec. 13. The utilities sector includes businesses that deliver electricity, gas, and water to consumers. This sector has provided steady returns since 2017—and while it only showed modest growth in the first half of 2022, it was only one of four sectors to show growth at all. The technology sector includes multiple sub-sectors and industries, from semi-conductor producers to software and hardware providers, as well as internet stocks and cloud computing. The energy sector includes companies that extract, refine or transport fossil fuels.

What Are the 11 Sectors of the Stock Market?

And since they pay out at least 90% of their taxable profit as dividends to shareholders, some investors take long-term holds in these stocks and expect dividend checks every three months. It’s real estate companies called REITs (real estate investment trusts) and real estate developers. The financial sector consists of banks, insurance companies, and real estate companies. Pharmaceuticals, healthcare equipment, and healthcare services companies are in the healthcare sector. Johnson & Johnson, Pfizer, Merck, Medtronic, and UnitedHealth are some of the bigger companies. The consumer staples sector is considered a defensive sector because it’s generally resilient in the event of an economic downturn.

Pot stocks involve the consumer discretionary sector, consumer staples sector, and healthcare sector. The consumer staples sector includes companies involved in food, beverage, and tobacco, as well as producers of household goods and personal products. Since these are goods and services that consumers need, regardless of their current financial condition, consumer staples is considered to be a defensive sector (i.e. recession-proof industries). Companies in this sector provide products and services that enable individuals to communicate with each other on a global scale. This is a new sector that also includes former technology companies originally in the information technology sector.

UK’s growth is a silver lining – and the clouds suggest recession looms

Since utilities are considered to be essentials for daily living, the utilities sector is also generally seen as a defensive sector. A stock sector is a collection of publicly-traded companies that work within the same general field of business—healthcare, energy, real estate, etc. The stocks in each sector, in turn, carry similar characteristics.

And with EVs, of course, you can see how Elon Musk’s tweets can spark even more action. Information provided by Titan Support is for informational and general educational https://investmentsanalysis.info/ purposes only and is not investment or financial advice. Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader.

Healthcare Sector

An individual can choose to invest in a single company, within an industry, or across multiple sectors to increase exposure and reduce risk. Or, they may choose to invest in a fund that offers exposure to multiple sectors. Businesses in this sector provide financial services to commercial and retail customers. Generally, that includes brokerage firms along with companies involved in banking, money markets, mortgages, investing, and insurance.

• Analyst George Staphos says Graphic is his top stock pick in the paper and packaging group, which faces macroeconomic challenges from inflation and supply chain disruptions.
• In other words, we want to invest in sectors that are outperforming the overall market.
• “A rising tide lifts all boats” is a common saying in the stock market.
• For example, during the low point of an economic cycle, consumer staples and utilities generally hold their value and do reasonably well.

All publicly listed companies should fall into one of the 11 stock market sectors but only the major public companies are actually tracked and officially placed into the sectors and industries. Firms engaged in oil and gas drilling, refining, and exploration and development of oil and gas reserves are included in the energy sector. This sector also includes firms that generate non-renewable and renewable energy and firms that provide oil and gas equipment services. The energy sector is made up of companies that explore, produce, and store fuels such as oil, natural gas, and coal. These businesses engage in a wide range of services, such as exploring, drilling, refining, transporting, manufacturing equipment, and marketing. The energy sector experiences volatility and performs well when oil prices are high.

Companies in this sector provide the raw and refined materials needed to keep the supply chain going. The Global Industry Classification Standard (GICS) is designed to provide a consistent way to sort stocks according to shared characteristics. The GICS system helps brokers, financial advisors, researchers and others classify stocks into sectors. The GICS is updated periodically to reflect changes in the market. Constructing a diverse portfolio can feel like a daunting task.

UPS (UPS -1.3%) and Raytheon (RTX -1.65%) are the largest U.S. industrials stocks. Some of the largest industrial companies in the world include Boeing (BA), Honeywell (HON), and Union Pacific (UNP). If you want to learn more, a financial advisor can help you understand this process. The financials sector tends to start picking up toward the end of a down cycle as things start looking a little better.