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Riding the Wave: These 3 Industry Groups are Making a Splash with Expected Money Inflows
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Thus far this year, small-cap stocks and large-cap tech have stolen the show – for differing reasons. Small caps, represented by the Russell 2000 Index ETF ((IWM - Free Report) ), have garnered attention due to their relative weakness. The demise of Silicon Valley Bank has thrown doubt at many stocks that make up the SPDR S&P Regional Banking ETF ((KRE - Free Report) ), which in turn makes up a large part of the IWM. Conversely, big-cap tech, and the Nasdaq 100 ETF ((QQQ - Free Report) ),have made an impact for the opposite reason. QQQ is up nearly 20% while underlying components such as Nvidia ((NVDA - Free Report) ) are higher by a whopping 91% or more.
Image Source: Zacks Investment Research
One common phenomenon in the stock market is industry group rotation, which refers to the shifting of investor preferences from one industry to another. Though the trends mentioned above show little signs of slowing, they will eventually diverge from the trend and other industries will take the limelight. Investors should be prepared should that happen. Even if it does not happen right away, it also makes sense to diversify. Today we will discuss 3 industries (and stocks within them) worth watching:
Solar Energy
The clean energy sector has been on a growth trajectory for years as geopolitical conflicts have disrupted the supply of fossil fuels, world governments push for clean energy agendas, and solar technology improves and becomes more efficient. The Invesco Solar ETF ((TAN - Free Report) ) is normally the best proxy for the group; however, it has moved sideways for months. As such, investors should stick to the group’s leading stock which is Zacks Rank #2 (Buy) stock First Solar ((FSLR - Free Report) ). FSLR is currently set up in a good-looking base structure ahead of its earnings which are due April 27th.
Image Source: Zacks Investment Research
Medical Products
The medical products industry often flies under the radar. However, the group has some attractive characteristics that make it worth investing in. Generally, companies within this group tend to be recession-proof, stable, and offer long-term growth. Wednesday, surgical robotics maker Intuitive Surgical ((ISRG - Free Report) ) injected life into the industry after it beat earnings expectations. The stock shot higher by more than 10% in the session on expanding volume. Though the stock is extended in price at this juncture, investors may want to turn their attention to glucose monitoring system maker Dexcom ((DXCM - Free Report) ). DXCM is breaking out of a multi-month base ahead of its April 27th EPS report. For those who prefer more diversification, iShares US Med Device ETF ((IHI - Free Report) ) isan ETF proxy for the industry.
Image Source: Zacks Investment Research
Enterprise Software
It’s easy to see why the Internet-Software group is a top 25% group. Whenever I see multiple stocks in an industry breaking out simultaneously, my eyes light up. It is difficult to find an industry with more momentum than the enterprise software group. Enterprise software companies Samsara ((IOT - Free Report) ) and Asure Software ((ASUR - Free Report) ) each broke out last week and are up 15% since. Now, Fastly ((FSLY - Free Report) ), a top performer this year, is giving investors another chance to jump onboard as shares into the 50-day moving average.
Image Source: Zacks Investment Research
Bottom Line
Markets have been known to have periods of “nasty” industry group rotations, catching investors off guard. Investors should look at the three under-the-radar groups above as ways of diversifying into other parts of the market.
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Riding the Wave: These 3 Industry Groups are Making a Splash with Expected Money Inflows
Thus far this year, small-cap stocks and large-cap tech have stolen the show – for differing reasons. Small caps, represented by the Russell 2000 Index ETF ((IWM - Free Report) ), have garnered attention due to their relative weakness. The demise of Silicon Valley Bank has thrown doubt at many stocks that make up the SPDR S&P Regional Banking ETF ((KRE - Free Report) ), which in turn makes up a large part of the IWM. Conversely, big-cap tech, and the Nasdaq 100 ETF ((QQQ - Free Report) ),have made an impact for the opposite reason. QQQ is up nearly 20% while underlying components such as Nvidia ((NVDA - Free Report) ) are higher by a whopping 91% or more.
Image Source: Zacks Investment Research
One common phenomenon in the stock market is industry group rotation, which refers to the shifting of investor preferences from one industry to another. Though the trends mentioned above show little signs of slowing, they will eventually diverge from the trend and other industries will take the limelight. Investors should be prepared should that happen. Even if it does not happen right away, it also makes sense to diversify. Today we will discuss 3 industries (and stocks within them) worth watching:
Solar Energy
The clean energy sector has been on a growth trajectory for years as geopolitical conflicts have disrupted the supply of fossil fuels, world governments push for clean energy agendas, and solar technology improves and becomes more efficient. The Invesco Solar ETF ((TAN - Free Report) ) is normally the best proxy for the group; however, it has moved sideways for months. As such, investors should stick to the group’s leading stock which is Zacks Rank #2 (Buy) stock First Solar ((FSLR - Free Report) ). FSLR is currently set up in a good-looking base structure ahead of its earnings which are due April 27th.
Image Source: Zacks Investment Research
Medical Products
The medical products industry often flies under the radar. However, the group has some attractive characteristics that make it worth investing in. Generally, companies within this group tend to be recession-proof, stable, and offer long-term growth. Wednesday, surgical robotics maker Intuitive Surgical ((ISRG - Free Report) ) injected life into the industry after it beat earnings expectations. The stock shot higher by more than 10% in the session on expanding volume. Though the stock is extended in price at this juncture, investors may want to turn their attention to glucose monitoring system maker Dexcom ((DXCM - Free Report) ). DXCM is breaking out of a multi-month base ahead of its April 27th EPS report. For those who prefer more diversification, iShares US Med Device ETF ((IHI - Free Report) ) isan ETF proxy for the industry.
Image Source: Zacks Investment Research
Enterprise Software
It’s easy to see why the Internet-Software group is a top 25% group. Whenever I see multiple stocks in an industry breaking out simultaneously, my eyes light up. It is difficult to find an industry with more momentum than the enterprise software group. Enterprise software companies Samsara ((IOT - Free Report) ) and Asure Software ((ASUR - Free Report) ) each broke out last week and are up 15% since. Now, Fastly ((FSLY - Free Report) ), a top performer this year, is giving investors another chance to jump onboard as shares into the 50-day moving average.
Image Source: Zacks Investment Research
Bottom Line
Markets have been known to have periods of “nasty” industry group rotations, catching investors off guard. Investors should look at the three under-the-radar groups above as ways of diversifying into other parts of the market.