11 Best Stocks In Each Sector
We will be discussing the 11 Best Stocks Within Each Sector in this article. Skip the overview and jump straight to the 5 Best Stocks In Each Sector.
Long-term investors will benefit from a well-diversified portfolio when investing in the stock markets. Warren Buffett once said, “Don’t put all your eggs in one basket.” This is a great reminder of the importance of having a diverse portfolio.
You may be wondering what diversification is. Diversification refers to reducing risk by investing in diverse industries or assets with less correlation. Diversification can help reduce risk and increase long-term potential returns. Diversification is possible when it comes to investing in stock markets. It can be done by diversifying your portfolio and investing in stocks from different industries or geographic areas.
Diversification in stock investment has many benefits
Risk reductionSpreading investments among a variety stocks reduces the risk of losing money as one stock’s performance is unlikely to have an impact on the entire portfolio. Because the returns of different stocks are often uncorrelated, they are not affected by the same factors.
Increased ReturnsDiversification is good for reducing the risk of losing, but it can also help to generate higher long-term returns. Because a portfolio that is diverse is more likely captures the overall performance of the market than one stock or sector, it is less dependent on them.
FlexibilityDiversification allows investors the flexibility to adapt their portfolios to market changes by adding or subtracting stocks as necessary. This flexibility allows investors to maximize opportunities and minimize possible losses.
Warren Buffett famously made a bet on the S&P500 that the market index would beat the returns generated through active investing by hedge fund managers. Warren Buffett won, and no hedge fund was capable of beating the market during the period January 1, 2008 to December 31, 2017.
The stock market was not performing well in 2022, but there were some sectors that provided investors with high returns. As oil and gas prices rose after the conflict in Ukraine and increased global demand, energy stocks soared. In 2022, The S&P 500 Energy Index returned Investors received a staggering 63%, inclusive of dividends. The rising interest rate pressures on growth stocks meant that value stocks delivered solid returns to investors. The S&P 500 Value Index, although is down 5.1% YTD on a total return basis, it outperformed the broader S&P 500 index substantially, which is down ∼20% YTD.
Our Methodology
We selected the most popular stock among hedge funds in each industry to create a list of the top 11 stocks in each sector. MSCI. Based on the holdings of professional money managers, hedge fund sentiment can be used to gauge a company’s prospects.
11 Best Stocks In Each Sector
11. Visa Inc. (NYSE:V)
Sector: Financials
Number of Hedge Fund Holders : 165
Financial services include firms that offer financial services to retail and commercial customers. These services include banking and mortgages, credit cards, tax preparations, payment services, planning, management, investment, and accounting.
Visa Inc. (NYSE.V), a global financial services firm, is headquartered in San Francisco. It was established in 1958. It is one of the most prominent and well-known payment processing firms in the world. Visa Inc. (NYSE.V) offers a variety of financial services including credit and debit card processing and electronic payment processing. Customers, merchants and financial institutions around the globe use the company’s products.
Donald Fandetti (an analyst at Wells Fargo) raised his price target on Visa Inc.(NYSE:V), to $250. While maintaining an Overweight rating, Fandetti maintained a stock rating of Overweight. According to the analyst, the company is well-established in global money movement and can deliver EPS growth of 20% for the future.
We also include Visa Inc., NYSE:V, Domino’s Pizza, Inc., NYSE:DPZ, Meta Platforms, Inc., NASDAQ:META, and Microsoft Corporation (NASDAQ – MSFT) in our 11 Best Stocks in Each Sector.
Insider Monkey found that 165 hedge funds were long Visa Inc. (NYSE.V) at the close of Q3 2022. TCI Fund Management At the close of Q3 2022, he was still the largest stakeholder in the company.
10. The Home Depot, Inc.HD)
Sector: Consumer discretionary
Number of Hedge Fund Holders – 89
The consumer discretionary is divided into the manufacturing segment, which includes automobiles, durable home products, textiles & clothes, and recreational equipment, and the services segment, which comprises hotels, restaurants, recreational facilities, media production, and consumer retailing and services.
The Home Depot, Inc. (NYSE.HD) has more than 2200 retail locations in the United States, Canada, Mexico, and other countries. The company sells a variety of home improvement products including tools, building materials, appliances, and decor. Through its professional services division, The Home Depot, Inc. (NYSE.HD) offers home improvement services such as repair, installation, and maintenance.
Scot Ciccarelli, a Truist analyst, reduced his price target for The Home Depot, Inc., (NYSE:HD), to $382 from $400 on November 16, 2022. He maintained a Buy rating for the stock. The analyst stated that the company’s operations were robust and that its margins are still under control, despite housing problems and a challenging cost environment.
The following were made by Matrix Asset Advisors comment Information about The Home Depot, Inc., (NYSE:HD), in its Q3-2022 investor letter
After selling our shares earlier this year, the shares dropped sharply due to concerns over a soft housing market and lower consumer spend. We re-established a stake in The Home Depot, Inc. (NYSE :HD) during the quarter. HD is well managed and we believe it will continue to make good profits, even as the economy slows. Its inventory contains products that are in high demand year round from homeowners and contractors who want to improve and maintain their homes. The company has always been supportive of shareholders, repurchasing shares, and increasing the dividend, most recently by 15 percent earlier in the year. HD’s current dividend yield was 2.8% as of September 30.
Insider Monkey’s database shows that 89 hedge funds held stakes in the company as of September quarter. Fisher Asset Management The Home Depot, Inc. (NYSE.HD), held the largest stake at Q3 2022.
9. UnitedHealth Group IncorporatedUNH)
Sector: Health Care
Number of Hedge Fund Holders : 110
Companies that offer healthcare services include those that provide medical equipment and services as well as companies that manufacture and distribute drugs. It includes companies involved with the development, manufacture, distribution, marketing, and research of biotech products.
UnitedHealth Group Incorporated (NYSE :UNH), is a multi-national healthcare company located in Minnetonka. It is a conglomerate of healthcare companies that owns a variety of businesses including UnitedHealthcare and Optum. UnitedHealthcare is the main business of the company. This provides healthcare services and insurance for individuals, families, as well as businesses, in the United States.
George Hill, an analyst with Deutsche Bank, raised his price target for UnitedHealth Group Incorporated, (NYSE:UNH), to $615 on October 18, 2022. He also maintained a Buy rating. The analyst stated that the company had strong third quarter revenue with strong membership growth and increased value-based agreements.
According to Insider Monkey’s database 110 funds were still bullish on the company as of Q3 2022. GQG Partners At the end of the third-quarter, the largest long position was held on shares by the company.
8. Exxon Mobil Corporation NYSE:XOM)
Sector: Energy
Number of Hedge Fund holder: 75
The energy sector includes firms that are involved in oil and natural gas drilling, refining, exploration, development, and refinement. This sector includes companies that produce non-renewable or renewable energy, and those that provide oil and natural gas equipment services.
Exxon Mobil Corporation, NYSE:XOM, is involved in a number of energy-related activities, including the exploration and production oil and natural gas, refining and marketing, distribution of petroleum products, chemical manufacturing, and distribution. Exxon Mobil Corporation (NYSE.XOM) operates in over 50 countries and is well-known for its integrated, large-scale business model.
Ryan Todd, an analyst at Piper Sandler raised his price target on Exxon Mobil Corporation’s (NYSE:XOM), to $131 from $113 on November 11, 2022. While maintaining an Overweight rating for the stock, Todd also increased his price target. According to the analyst the company’s third quarter result has strengthened the macro outlook for integrated oil going into 2023, according to him.
According to Insider Monkey, 75 hedge funds had stakes in Exxon Mobil Corporation’s (NYSE:XOM), at the end-of-the third quarter. GQG Partners At the close of Q3 2022, he was still the largest stakeholder in the company.
First Eagle Investments, an asset manager, highlighted a few stocks in its Q2 2022 investor newsletter. Exxon Mobil Corporation (NYSE :XOM) was one. Here This is what the fund stated:
Exxon Mobil, the integrated oil and gas giant, performed well in the second quarter. The stock was supported by the continued high price of energy products. Exxon Mobil is the US’s largest oil refiner. This has allowed the company to benefit from large crack spreads. These are the differences between the crude oil price and the petroleum products that it extracts. Exxon continues investing in US refinery capacity. The industry has seen a steady decline in this area since 2019. We are proud that Exxon has used its strong cash flows in order to reduce debt, and to return cash shareholders via stock repurchases and dividends.
7. NextEra Energy, Inc.NEE)
Sector: Utilities
Number of Hedge fund holders: 73
The utilities sector includes companies that provide basic amenities for consumers. This sector also includes companies that provide services such as water, electricity, sewage and natural gas.
NextEra Energy, Inc., (NYSE:NEE), is a Florida-based company that produces renewable energy. It is a leader for the development and operation clean energy assets. This includes wind and solar power stations and natural gas infrastructure. NextEra Energy, Inc. (NYSE NEE) is a company that owns and manages a variety of clean energy assets, including over 14,000 megawatts of solar and wind power capacity in the United States.
Shahriar pourreza, an analyst at Guggenheim, lowered his price target for NextEra Energy, Inc., NYSE:NEE to $99 and maintained a Buy rating on its stock. To adjust for seasonality, the analyst is decreasing his estimates.
Insider Monkey found that 73 hedge funds were long NextEra Energy, Inc. at the close of Q3 2022. Fisher Asset Management At the close of Q3 2022, he was still the largest stakeholder in the company.
6. Transdigm Group Inc (NYSE)TDG)
Sector: Industrials
Number of Hedge Fund Holders – 63
The industrial sector is made up of manufacturers and distributors who sell capital goods. It includes equipment for military and aerospace use, as well as building supplies and electrical equipment. This sector also includes companies that offer professional and commercial services such as printing, security, engineering, and construction services, among others.
TransDigm Group Inc., a global company, designs, manufactures and supplies components for aircraft, including fuel and hydraulic systems, cockpit security, engine components and engine components. These components can be used in general aviation, military, commercial and general aviation aircraft. It was founded in 1993 and is located in Cleveland, Ohio.
Wells Fargo’s ratings for the aerospace manufacturer company were downgraded last month from “Overweight” and “Equal Weight.” Matthew Akers, analyst at Wells Fargo, downgraded his rating for TransDigm Group Inc. citing lower demand and higher costs that could hinder the company’s growth. Akers also reduced his price target for TransDigm, which is listed under the ticker symbol TDG on the New York Stock Exchange, from $735 per shares to $660 per.
Here’s what Vulcan Value Partners had to say about Transdigm Group in the spring of this year.
“TransDigm Group Inc. Aerospace manufacturing company that produces highly engineered and niche components for commercial and military aircraft. The vast majority of the company’s profits come from aftermarket sales of sole-sourced products. The company has high levels of cash flow, and a shareholder-oriented management team that is good capital allocators. Despite the company’s strong results during the quarter and solid outlook, its stock price declined.”
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Disclosure: None. 11 Best Stocks In Each Sector This article was originally published by Insider Monkey.