The Top Sectors to Invest In

As you might know, all publicly-traded companies are regulated to disclose their financial information, including earnings, every quarter.

After the first three quarters of the fiscal year, they have to file the 10-Q report, a partial report on their financial performance and operations. After the fourth quarter or after their fiscal year-end, they have to file the 10-K report or annual report.

Because most companies are required to file within 45 days of the fiscal quarter-end, and most companies follow the calendar year schedule, you’ll see a lot companies reporting their earnings in the same period. This period is called the earning season.

Why is this important? Because this period can create a huge opportunity for investors and traders to take advantage of significant stock runs that occur as a result of these earnings releases.

As stock prices reflect investors’ expectation about their earnings, and companies can beat, meet, or miss analysts’ earning expectations, you’ll see a lot of stocks moving, high volatility, and better opportunities to trade during that period.

The bottom line is that you must pay attention closely to this period. You don’t want to miss the many opportunities available to potentially grow your account.

Examples of Top Sectors to Invest In

The GSCI methodology counts 11 sectors in total.

They include energy, materials, industrial, consumer discretionary, consumer staples, health care, financials, information technology, telecommunication, utilities and real estate.

To learn more details about each sector, you can check the MSCI website. Each sector has its own index to track its performance. That’s one way investors have to follow how a sector is performing.

Let’s take a look at five of the most important sectors of the market.

Information Technology

This sector comprises companies selling software, hardware, semiconductors and/or technology-related services like Microsoft, Apple, Intel, or Cisco.

Companies is this sector have driven market growth over the last several years. This is the biggest sector by market capitalization and represents close to 25 percent of the total market.

Some technology companies, like Alphabet (GOOGL) and Facebook (FB), used to belong to this sector, but they have been now reclassified to the newly expanded communication services sector, which now replaces the old telecommunication sector.

Companies in this sector with innovative business models — or “the next breakthrough idea” — are all the rage, so many investors and traders follow companies here.

Consumer Discretionary

This sector includes companies that sell products or services that are considered non-essential or discretionary by consumers.

When the economy goes well, this sector tends to perform much better because consumers have that “extra” money to spend on non-essential items.

Companies like hotels and casinos, restaurants, education services, media and entertainment companies, apparel, and big-box and internet retail stores are part of this sector.

Big names like McDonald’s, Nike, Starbucks, and Amazon are classified as consumer discretionary companies. When you think of spending money “out-of-home” in leisure or retail, this is the category to think of.

As many people shift their spending habits to enjoy “experiences,” analysts expect a huge influx of money coming into this sector, so monitor the market to spot interesting investment opportunities.

Financial Sector

This sector includes major financial groups, banks, insurance companies, investment banking firms, and brokerage companies, among similar outfits.

Citigroup, Goldman Sachs, Bank of America, and American Express are a few of the big names in this sector.

As the government rolls back costly compliance regulations that used to apply to small and regional banks and financial firms, there good opportunities to explore here.

Real Estate

Investing in “bricks” has always been a part of the strategy of many successful investors, either by investing in properties themselves or through vehicles like real estate investment trusts (REIT).

A REIT is basically a company that buys and operates income-producing properties like shopping malls, office or apartment buildings, hospitals, and warehouses.

They’re excellent income-producing investments because, by law, they need to distribute at least 90 percent of their taxable income to investors via dividends. As with any investment in real estate, the best opportunities are found on undervalued companies that generate free cash flow.


When you think about energy stocks, the first thing that comes to your mind is likely oil.

While there’s a lot of market expectation about alternative energy, the truth is that the bulk of the market still lies in traditional oil and gas companies.

This type of stock tends to do better during times when oil price rise and stay high, and then pull back during times of falling oil prices.

That’s five of the 11 sectors, but you get where this is headed.

Tomorrow, let’s move on to trading.

You can check out the other sectors here and here.


Tim Sykes
Editor, Penny Stock Millionaires

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