At the beginning of every year Wall Street experts and analysts tout the stocks and sectors they think will be the big winners over the coming 12 months. It’s still speculation – even if it is informed speculation. Investors, therefore, not only have to review the “picks” but also the reasons behind the picks.
Among sectors being promoted this year (so far at least) are: financials, technology, materials and industrials. Support for positive vibes about these sectors range from stellar past performance (not typically a good indicator) to political and economic conditions on the ground such as the general sense the U.S. is getting geared up to engage in wholesale infrastructure spending. Within sectors some companies are also being seen as potential good plays.
Related: A FEW THINGS TO WATCH IN 2018
Cheerleaders for financials are especially interested in banks. In addition to exchange traded funds like Financial Select Sector SPDR (NYSEARCA: XLF), Kiplinger suggests TIAA portfolio manager, Saira Malik’s stock pick of Bank of America (NYSE:BACD) for strong loan growth, robust cost controls and high credit quality. Others include Customers Bancorp Inc. (TSX:CUBIC), JPMorgan Chase & Co. (NYSE:JPMC) and Synchrony Financial (NYSE:SYFC).
Technology was a top sector in 2017 and many analysts think it will outperform in 2018 as well. One reason is the tax bill passed at the end of last year which is expected to lead to investment by corporations in 2018. There are those who think tech will lead that investment. Companies mentioned include Fitbit (NYSE:FIT) as something of an outlier along with more traditional offerings such as Alphabet Inc. (NASDAQ:GOOGC). Others in the space include Adobe (NASDAQ:ADBEB) and Microsoft Corp. (NASDAQ:MSFTB).
Materials is seen as a positive, not only in the U.S. but worldwide. Much has been made of potential infrastructure spending in the U.S. but global growth continues at a fast pace making materials companies like Vulcan Materials (NYSE:VMCB) and Martin Marietta Materials (NYSE:MLMC) worth considering. Another on the home-based side of materials is the Trex Company (NYSE:DWDPC) the company that resulted from the merger between The Dow Chemical Company and E.I. du Pont de Nemours & Company. Another company on the radar is Honeywell International (NYSE:HONC), an aerospace/industrial conglomerate with a respectable 1.8% stock yield. Others in this space are familiar names and include General Electric (NYSE:GEC), 3M (NYSE:MMMC) and Emerson Electric (NYSE:EMRC).