Industry trends can be invaluable when researching investment opportunities. Understanding investment industry sectors can help you better understand the forces that influence the value of individual companies and select stocks that bring balance to your portfolio. Here’s an overview of today’s best sectors to invest in for 2024.
How to Evaluate Investment Industry Sectors
When evaluating investment sectors and industries, it’s important to understand the way broader trends can influence their performance. Here are some questions to consider when evaluating market sectors or companies that fall within these sectors:
- How has artificial intelligence impacted the performance of this sector?
- What regulatory challenges face this industry?
- How do trends in consumer behavior influence this sector?
- Will this sector provide long-term or short-term gains?
- Does this sector experience sustained or cyclical growth?
Answering these questions can help you better understand the performance of these sectors and select ones that align with your investing goals.
Keep in mind that these are not just questions to ask before you make an investment; these questions can help you monitor and evaluate your investments as you explore new opportunities in these varied industries.
The Best Sectors to Invest In
Each of the following sectors represents a growing segment of the American economy. Companies from these sectors are currently seeing strong growth or, in the case of agriculture and mining, are seeing something of a renaissance in terms of market performance.
Here are today’s top 5 investment industry sectors and how they might fit your portfolio.
Technology
While the tech sector includes a variety of companies focused on hardware, software, and research and development, the most explosive growth has occurred in the areas of cloud computing, cybersecurity, and artificial intelligence (AI).
It’s impossible to overstate the impact that AI is having on the industry and how much it is driving growth and innovation, with applications ranging from healthcare to financial services to autonomous vehicles.
Investors should be aware of the increasing calls for regulation of these emerging technologies. It’s likely that tech companies may see increased regulatory challenges moving forward. But these concerns are vastly overshadowed by the sheer speed of technological change. Today’s top tech stocks include:
- NVIDIA (NVDA)
- Crowdstrike Holdings (CRWD)
- Broadcom Inc. (AVGO)
- Micron Technology (MU)
- Advanced Micro Devices, Inc. (AMD)
Technology also plays a promising role in future-focused applications, such as combating climate change.
For all these reasons, the technology sector will continue to present fast-growing opportunities for tech investors. But given the speed of change, it’s equally important for investors to stay on top of new developments that can affect the performance of individual companies within the sector as a whole.
Industrial
Industrial stocks reflect companies involved in construction, manufacturing, and the development of the nation’s infrastructure. Unlike fast-moving tech stocks, many industrial companies have been around for decades, which may provide some stability to your investment portfolio.
But even long-term giants are experiencing something of a revolution. AI-powered systems and robotic technologies are boosting efficiency and transforming the supply chain framework.
Meanwhile, a commitment to sustainability and ESG criteria provides industrial companies with a future-focused outlook and the flexibility to adapt to new regulatory challenges.
Top industrial stocks include:
- Illinois Tool Works (ITW)
- Caterpillar (CAT)
- ABB Ltd (ABB)
- Cummins Inc. (CMI)
- Eaton Corp. PLC (ETN)
Why invest in industrial sector stocks? As an added benefit, many industrial stocks offer dividends and a history of sustained growth.
Investors should be aware of cyclical trends that impact this industry, but recent advances in automation and AI have given these companies a greater edge. Investors may discover that many industrial stocks offer strong stability, making them ideal buy-and-hold stocks.
Healthcare
Pharmaceutical stocks surged during and after the COVID-19 pandemic. Since then, the healthcare industry has continued to exhibit strong growth, in part due to the rise of personalized medicine and telehealth.
Additionally, AI and machine learning are contributing to new advancements in genomic medicine and streamlining the development of groundbreaking treatments.
Investors might consider such healthcare stocks as:
- Bristol-Myers Squibb (BMY)
- CVS Health (CVS)
- Baxter International (BAX)
- GlaxoSmithKline (GSK)
- Organon (OGN)
Many healthcare stocks also pay dividends, presenting an opportunity for some passive income for healthcare investors.
It’s true that the industry faces strong regulatory challenges, but advances in AI promise a streamlined process toward personalized therapies and innovative solutions. There’s also been a recent push toward providing therapeutics to the nation’s aging population, which presents another potential opportunity for growth in this sector.
But as with any technologically-driven sector, investors should monitor new developments to ensure that their portfolio is aligned with evolving industry trends.
Agriculture
America’s agricultural sector focuses on companies involved in food production, whether directly through crop and livestock management or companies that provide raw materials for farms and food producers. Several pivotal trends have accelerated the growth of this sector.
First, GPS technology has allowed for more precise farming practices, while biotechnology has enhanced crop production and disease resistance.
Second, many American consumers have shifted to plant-based diets, a trend that’s opened new markets within the agricultural sector.
Third, concerns over climate change have led to new innovations and practices, particularly with regard to pesticides and water management.
As a result, the agricultural sector has experienced something of a renaissance. Investors might look to top companies, such as:
- Archer-Daniels-Midland Company (ADM)
- Corteva Agriscience (CTVA)
- Nutrien, Ltd. (NTR)
- Deere and Company (DE)
- Bayer (BAYRY)
Agricultural stocks are subject to cyclical demands and seasonal fluctuations, but many large-cap stocks can be valuable buy-and-hold options for long-term investors.
Mining
Recent years have accelerated the demand for raw materials for construction and emerging technologies.
For example, as American consumers shift from fossil fuels, the raw elements that compose batteries and computer systems have risen in demand. Mining companies are adapting to meet this demand, all while employing sustainable practices to meet an evolving set of industry regulations.
On the one hand, the demand for raw materials for batteries and technology has contributed to strong growth within the mining industry. On the other hand, fluctuations in commodity prices and international relations have introduced volatility into this sector.
This may create natural entry and exit points for investors willing to research and monitor industry trends, though the rising need for raw materials may also make mining stocks an attractive long-term investment option.
Popular mining stocks include:
- Freeport-McMoRan, Inc. (FCX)
- Teck Resources Limited (TECK)
- Agnico Eagle Mines Limited (AEM)
- Barrick Gold (GOLD)
- BHP Group (BHP)
Given the high international demand for mining materials, this can be one of the best investment industry sectors. Some companies may also offer dividends to provide investors with a source of passive income.
How to Invest in the Best Industries
To invest in these sectors, you have two main options. You can select individual stocks from each sector and add them to your portfolio. Or you may be able to find a mutual fund or ETF that focuses on one of these sectors in particular.
The latter option will give you access to a wider assortment of stocks, though they will still be focused on the industry you choose.
However, be cautious. Investing too heavily in any one sector can present risks if the industry experiences a downturn. You can mitigate those risks by investing in stocks from multiple industries, creating balance in your portfolio and protecting you through diversification.
Stay on Top of Industry Trends
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