Promising Industries and Stocks on the Stock Market

Published:7 July 2021 Updated:4 January 2024

The economy is expected to continue its gradual recovery until the end of this year. Perhaps another wave of the coronavirus pandemic will be avoided or, if it happens, it will not be as disastrous as the first one. Some sectors of the economy will grow faster and some stocks will be more promising. Let’s try to find out which ones.

Promising sectors of the stock market

Let’s take a look at the industries that in our opinion have the most potential for growth this year.

Health Care

Healthcare is believed to be one of the most promising industries right now, especially stocks of companies that develop coronavirus drugs and vaccines. The growth of medical company indices, though not too high, is higher than the general indices, for example, the U.S. S&P 500 Health Care (Figure 1) is up 7%, while the S&P 500 is up 6.3%.

Stock market reviews

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In addition to vaccines and drugs (not only from COVID-19), telemedicine, oncology, immunology and neurology are interesting areas for investors. Stable inflows of investment, regardless of the pandemic, are recorded in the development of drugs for Alzheimer’s and cancer drugs. Bristol Myers Squibb, Bayer, Biogen, Sanofi, Gilead Sciences, Pfizer and Johnson & Johnson are among the specific companies whose shares could bring in income.

IT, Internet, gaming industry

The IT sector seems unshakable in any perspective. Now it is the main direction of investment for most players in the market. It is believed that the main efforts of technology giants will be focused on the development of cloud services, providing companies with remote operation. Also it should not be forgotten that IT is the most “start-up” industry, and in this industry should be especially carefully monitored for new trends. A threatening factor is the “omnipresence” of Internet companies, which leads to clashes with governments. Development, to a lesser extent, and the Internet, to a greater extent, are becoming more and more politicized businesses, and this must be taken into account when investing. The gaming industry is a fast-growing industry, specific, but its prospects in terms of investment are evaluated positively. Particular attention should be paid to the development of VR (virtual reality) games. Here it is possible to consider not only games The number and quality of these devices are growing rapidly, but also possible investments in the production of devices such as VR helmets, sensors, and so on.

Consumer sector

Consumer goods is a stable sector that grows in almost any situation. Only the direction can change, for example, during the pandemic the direction of consumer goods delivery intensified. As the pandemic recedes, consumer goods trade will inevitably intensify (Fig. 2), which determines the further growth prospects of this direction.

Growth in the consumer sector

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Transportation

During the pandemic, the transport industry suffered almost the most and is still far from full recovery. But the industry is gradually recovering (Fig. 3). This applies to both freight and passenger transportation. Since recovery is inevitable, it might be a good decision today to buy at the lows, hoping for growth. Perhaps we should take a closer look at shares of Matson Inc., FedEx (FDX), Union Pacific Corporation (UNP), FESH, GMK, Global Truck (GTRK).

Dynamics of transport companies

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Communication services

Another steadily growing industry in any situation is the communications sector. During the pandemic, companies in this sector have risen, and the outlook for development remains good. The range of services has long gone beyond communication, and now companies can act as payment systems. They offer infotainment services, banking services and more; in fact, communication has now become one of the main consumer products. All this determines the growth prospects of the shares of communications companies, including, for example, Orange, Bouygues, SFR or AT&T, MTS, etc.

Alternative Energy

Large investments are being made in the renewable energy industry. The drivers of investment are not only and not so much the enthusiasts, but also the governments of developed countries, which seek to improve the environmental situation in their countries and try to organize the fight against global climate change. An additional plus in this direction is the recently adopted infrastructure plan of J. Biden, in which a significant share is taken by projects related to alternative energy. The long-term prospects in this business are no longer determined by governments, but by the real need to move from a hydrocarbon economy to an economy built on renewable energy sources. So it might be worth taking a closer look at the stocks of NextEra Energy (NEE, Figure 4), Edison International (EIX), Renewable Energy Group Inc (REGI) and many others.

NextEra stock performance

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Oil & Gas

If the alternative energy industry is growing by the efforts of developed countries, the oil and gas industry is revived by consumers, first of all, transportation is activated, and the domination of green transport is still a long way off. Accordingly, the shares of hydrocarbon companies are growing nicely. Therefore, we should not discount Gazprom, Exxon Mobil, Shell, Total and other giants – representatives of the “old economy” who still largely determine the movement of the “new economy”. At the same time, when assessing risks, one should not forget that the hydrocarbon business is the most politicized one, and it can be really influenced by the countries where oil and gas are produced, and this influence can be economically unreasonable and therefore unpredictable. Another factor whose influence is growing and threatens to become the leading one in the future is the tightening of environmental requirements by the richest and most influential countries. A partial or, in some places, complete renunciation of hydrocarbon energy sources is not a myth, but a reality of the foreseeable future.

Automotive companies

During the pandemic, the auto industry was one of the hardest-hit industries, and it is still just beginning to recover. This promises good prospects for stock prices to rise from lows. In this context, we need to keep a close eye on the chip shortage situation in the auto industry. This is a serious problem, with a solution to which the stocks of car manufacturers could rise seriously. Special attention should be paid to electric cars and, accordingly, batteries, as automakers are investing a lot of money in this area. Many of them have already announced dates for the transition to the production of exclusively environmentally friendly cars. You can seriously think about investing not only in Tesla (although it’s not a bad choice), but also in Volkswagen, GM, Daimler and so on. Concerns are also investing in the development of unmanned vehicles – this area is rapidly gaining momentum and promises good profits. On the plus side, the companies’ initiatives are fully supported by the authorities of developed countries, many of which have already set dates for the transition to electric vehicles in certain cities.

Semiconductors

Speaking of chips. The global shortage has affected almost all industries. And it provides excellent growth prospects for processor manufacturers. Since the beginning of the year, shares of Intel have risen by more than 10%, and it is believed that they will rise further – the deficit is still far from being eliminated. Shares of leading video chip maker NVidia have also risen (Figure 5), and by almost 45% in the first six months. There are no obstacles to the continuation of growth of manufacturers in this industry, the majority of investors are waiting for further growth of share prices.

NVidia stock forecast

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Companies

Let’s look at the most promising in terms of growth in the value of the company’s shares.

J&J

Johnson & Johnson (J&J) is a multinational corporation specializing in the development of medical devices, pharmaceuticals, consumer chemicals, etc. Johnson & Johnson is one of the world’s most valuable companies and one of only two U.S. companies with a credit rating higher than the U.S. government. The company’s common stock is listed in the Dow Jones Industrial Average, which speaks for itself and, to a certain extent, guarantees the reliability of the company and its securities. The prospects for J&J stock at the moment are determined by the fact that the company is actively involved in developing a vaccine against coronavirus, has a contract with the U.S. Department of Health Advanced Research Development Administration (BARDA) to supply 100 million doses of the vaccine, and with companies in Great Britain to supply 30 million doses of the vaccine. As of June 30, the stock was worth $164, up about 17% over the year. It should be noted that after soaring to $170 in May, the stock has declined, but now the positive trend has prevailed again, which is likely to strengthen.

Adobe

Adobe Inc. – is a software company specializing in a wide range of software, including graphics, photography, illustration, animation, multimedia/video, film, and print. The company’s flagship products are Photoshop, Adobe Illustrator, Adobe Acrobat Reader and Portable Document Format (PDF). In addition to the fact that the quotations of software companies are steadily growing simply because IT is the main driver of development of the modern economy, the pandemic has contributed to the growth in demand for any software, particularly for programs for the generation of online content. Adobe is the leader in this market. The pandemic is still going on, so the demand remains high. This, however, does not mean that when the final pandemic is announced, Adobe will collapse. Most likely, with the expected market rebound, the company will grow even more. The company’s stock has risen during the year from $468 to $587, a five-year trend that is also upward. Investors in Adobe stock expect the stock to rise to $600 for the foreseeable future.

Alibaba Group

Alibaba Group (Figure 6) is a Chinese company that specializes in online commerce and Internet technology. It is one of the fastest-growing companies in the world, which has only strengthened its position during the pandemic, even though delivery of goods has not worked well. In addition to the fact that Alibaba primarily an online retailer, the company also provides B2C and B2B sales services through web portals, electronic payment services, shopping search engines, cloud computing services, it is the world’s fifth-largest artificial intelligence company.

Alibaba stock performance

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It should be noted that during the year the value of the shares decreased significantly. This was due to the conflict situation between China and the United States, initiated by Donald Trump’s administration. As it is clear now, the Biden administration is not so rigid, so during the last month the share price went up from $209 to $227. Perhaps the prospect of the Chinese superstore stock has returned, in the medium term, Alibaba stock is considered a good investment, but we need to closely monitor the state of U.S.-China relations.

Vodafone

Vodafone Group Plc is a multinational telecommunications company, the world’s second largest mobile operator with services in Asia, Africa, Europe and Oceania, and Vodafone Global Enterprise provides telecommunications and IT services to corporate customers in 150 countries. Vodafone is primarily listed on the London Stock Exchange and is listed on the FTSE 100. The pandemic did not affect the company’s development in the best way. During the pandemic, Vodafone lost profits from the fallout of roaming services due to reduced international traffic, the share price experienced a significant drop, then a significant rise, and remains volatile in the short term. However, the company’s future prospects are defined by the fact that it provides services in rapidly developing countries and is one of the leaders in the development of 5G communications. Little by little, the economies of these countries are recovering and the telecommunications industry is reviving, which has a positive effect on the company’s development. Perhaps now is not the worst time to invest in Vodafone shares, the share price is now close to a minimum.

Farfetch

Farfetch is a British-Portuguese-based online retail platform for high-end clothing that amasses products from more than 700 boutiques and brands from around the world. The e-commerce company operates Web sites and mobile apps in English, Spanish, French, Japanese, Chinese, Arabic, German, Portuguese, Korean, Italian and Russian. The pandemic has had a positive impact on the development of online commerce in general and Farfetch in particular, but the company’s prospects are not only and not so much related to the pandemic, but to the fact that Farfetch continues to develop closer cooperation with the Alibaba platform and Richemont (Cartier brand). Presumably, the gross value of the shopping platform could increase to $1 billion. During the year, the share price rose from about $18 to about $50, stabilizing at that mark for now. Confirmation of the deal between Alibaba and Richemont has the potential to boost the share price significantly and quickly.

Apple

Apple Inc. – is a multinational technology company that develops and manufactures consumer electronics, software and online services. It is the largest technology company by revenue and the most expensive (since January of this year) company in the world, the fourth-largest manufacturer of PCs and smartphones. Together with Amazon, Google, Microsoft and Facebook, it forms the modern IT and Internet industry. While the outlook for Apple Inc. looks quite cloudless, investing in the company’s stock is considered a good idea. During the year, the share price has risen from about $91 to about $136, up from $124 in the last month. Unlike very many other companies, during the pandemic Apple Inc. suffered almost no damage, no collapses were experienced, the share price declines were there, but short, the trend remained upward.

An additional plus is that Apple is interested in attracting customers, for this purpose in the past conducted a stock split at a ratio of 4 to 1 and the shares became more affordable. Apple’s revenue is up 11% over last year to just under $60 billion. Even more impressively, earnings per share rose to $2.58, up 18%. Notably, Apple declared a dividend of $0.82 per share. In addition, Apple has held a 4-to-1 stock split, making its price more affordable for small investors.

Amazon

Amazon.com Inc. – a technology company best known as an e-commerce platform, but now it is more of a cloud computing, digital streaming, and artificial intelligence development giant. Amazon is the world’s largest Internet company by revenue, and in 2020 Amazon was considered the most valuable brand in the world. The stock is now worth about $3,455, but it has been rising steadily so far, a year ago it was worth about $2,900, in early June the stock was worth about $3,230. The pandemic has understandably only increased the company’s value and stock price.

The corporation has a huge and highly diversified business, which defines sustainability, excellent growth prospects, and growth in share price from any perspective if you look from today, so investing in Amazon stock might not be a bad idea. The difficulty is that Amazon stock is expensive, especially if the decision to invest in the stock is just being made. Also a risk to consider is that founder Jeff Bezos plans to step down as head of the company this year, he holds a stake in 16%, and will need to monitor the dynamics after that event.

Google

Alphabet Inc. or Google LLC is a multinational technology company that specializes in Internet-related services and products. Google.com is the most visited website, which consistently ranks high in the rankings of the most valuable brands, one of the richest companies in the world throughout history. Over the course of the year, the stock has risen from $1,470 to $2,440, which speaks for itself. At the same time the company is constantly in the spotlight, there are some organizational events like the formation of the Alphabet Workers Union, Google is often criticized, becomes a party to some scandals and proceedings, but still it is difficult to imagine what could have a lasting negative impact on this company in the long run. Therefore, buying the company’s shares might not be a bad decision. You should keep an eye on the dynamics of the value, because in short stretches of time, Google stock is a bit cheaper, then quickly recovers. This could be a good opportunity to enter the market successfully.

Netflix

Netflix, Inc. is best known as a subscription-based streaming service and now also as a movie and series generator. The service has hundreds of millions of subscribers, which is generally what its stability is based on. In 2021, Netflix was ranked the 8th most trusted brand in the world by Morning Consult. Netflix’s stock is now worth about $530. During the year, the share price fluctuated quite a bit, experiencing often very noticeable drops and sometimes high jumps. But the overall trend has remained positive, so the stock price is up from $480. The concept of Netflix business now looks progressive, in the medium term investing in the company’s shares may be a good decision.

Facebook

Facebook Inc. – one of the most valuable companies in the world, is among the “founding fathers” of IT and the Internet market, along with Apple, Microsoft and Amazon. Facebook is a platform for the communication of more than 3 billion people and for about 200 million businesses. Thus, the company’s business foundation and prospects are determined by its enormous scale. In addition to owning social networks, Facebook also develops apps and various solutions for online businesses. The pandemic of everyone sitting on social networks has had a positive effect on Facebook. Over the past 12 months, the stock has risen from about $235 to about $347, with the positive trend holding steady since March.

On the plus side in terms of evaluating the company’s prospects, even the existing opportunities of Facebook are not even close to being exhausted. For example, the monetization of Instagram is almost at zero, Facebook Shops has not even begun to work properly, and this is a potential audience of billions. The growing politicization of the company, both externally and internally, should be seen as risks. Governments seek to limit the company’s influence, conspiracy theorists of various types seek to increase their influence at the expense of Facebook, and Facebook itself is changing and tightening its internal rules. This process is far from over, and it is not clear how it will end. However, Facebook’s business is so large and diversified that it has not yet had a particular impact on the reliability and value of its shares. For example, Facebook has closed thousands of accounts that did not comply with the social network’s new policy and has not experienced any outflow of investments. However, this does not mean that if Facebook does not “overreact,” this will not happen in the future.

Take-Two

Take-Two (TTWO, Figure 7) is a developer and publisher of computer games, including Grand Theft Auto, Max Payne, Red Dead Redemption, NBA 2K and a host of others. The company has been growing quite rapidly, but it had few releases in 2021, so the stock price dropped from a high of $210 to $177 after a sharp rise in late 2020. Note, however, that Take-Two has officially announced the launch of Grand Theft Auto V, Grand Theft Auto Online and a number of new games through fiscal year 2022. Also Take-Two recently bought Nordeus, a Serbian mobile games studio, in a bid to strengthen its position in Europe. This means that the company has serious prospects and investing in this company at the minimum of this year will probably be a good decision.

TTWO stock performance

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Tesla

Tesla, Inc. – a leading manufacturer of electric cars, batteries and clean energy generation devices. The company’s sustainability is based not only on popular, expensive electric cars, but also on the fact that Tesla Energy is the leader in supplying solar panels to the U.S. domestic market and one of the world’s largest battery suppliers – in 2020 supply volume reached 3 GWh. The personality of the company’s founder, Ilon Musk, can be seen as an added value to the company. Tesla’s prospects are defined by the fact that the company is moving at the head of the key trend of our time – alternative energy. In terms of the automotive industry, Tesla now sets the tone and all other giants are set to compete with Tesla, which makes the entire global automotive industry move in a certain direction.

All of this sets the stage for investing in Tesla stock. During the year, their value rose from about $247 to about $681, though in January the stock price reached about $890, after which the stock began to fall. However, starting on June 3, the stock went up, and the dynamic was pretty steep until June 24, after which the stock price stabilized. Probably, the next hottest summer brought the issue of global warming to the forefront, which usually has a positive effect on the shares of environmental companies, so it is a good time to invest in the shares of such companies.

Gazprom

PJSC Gazprom is an energy corporation with Russian state capital, one of the largest publicly traded gas companies in the world and Russia’s revenue champion. The company’s prospects are defined by the support of the state, which is interested in expanding gas supplies around the world. Nord Stream 2 is of particular interest in this context. It seems to be close to completion and is about to start. At the moment, however, Germany is in the midst of a new lawsuit, with an uncertain outcome. But the good thing about Gazprom shares in particular is that they are very affordable, priced today at 281 rubles. And they’ve gained quite a bit over the year, starting at 197 rubles. They are in an uptrend now, and with the launch of Nord Stream 2 their value could increase considerably. But if Nord Stream is not launched, the losses in the case of a decline in the share price will not be too great.

 

What kind of stock and why buy it?

When choosing shares of a particular company, you should decide on your investment objectives. If the stock is seen as a relatively quick earner, then you should buy growth stocks – the profits from such stocks grow faster than the market. But in this case you need to be constantly aware of events, so as not to miss the moment of a good buy or sell. Usually these stocks do not imply payment of dividends. For a company, growth stocks are a tool for rapid capital growth through reinvestment of profits earned during a good period.

Dividend stocks or income stocks are designed for long-term investment and involve dividends paid to shareholders by the issuer of the stock. The return on a stock is calculated as the annual dividend paid by the company divided by the company’s share price. In theory, such stocks are protected against crises and are bought for the long term, disregarding short-term market fluctuations. Protective (non-cyclical) stocks are investments in non-cyclical companies that will be forced to operate in any crisis, such as food producers and sellers, utility companies. Their sustainability is determined by basic human needs, which do not change in any way with changes in Facebook rules or the release of a new Tesla.

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