To The Moon

Which industry/industries would you want to invest in if you can rewind time and go back to the start of 2022?

With the benefit of hindsight, that answer is simple. Across the 11 sectors that stocks are being classified into, the Energy sector has been the sole outlier, generating strong double-digit returns in an otherwise bearish year for the market.

That is, however, water under the bridge. We are not able to turn back time.

The bigger question now is, should you still be vested in the Energy sector? Is momentum still the strongest for stocks in the Energy sector or is there a new winner in 2023?

In this article, I will be highlighting the best-performing industries in 2023 [Returns update as of 1 Feb 2023]. There are 153 industry categories within the more generic 11 major sectors that most stocks are being classified into.

I will be highlighting some of the best-performing industries in 2023 on a YTD basis, the champion being an industry that generated YTD returns of approx. 24.4% (as of 31 Jan 2023).

And that is not an industry within the Energy sector. One of the best-performing industries in 2022, Thermal Coal, which generated more than 60% average returns (among the stocks in this industry) in 2022, has been one of the worst performers in 2023, with an average YTD 2023 returns of -2.4%.

Most stocks in the Energy sector and their respective industries have seen their price momentum weaken substantially as we entered 2023, except for one particular industry that is in our Top 5 list of best-performing industries in 2023.

Without further ado, here are the 5 best-performing industries in 2023. To be listed here, the industry needs to encompass at least 5 stocks within its category.

Best-Performing Industries #5: Uranium (Energy)

Source; Encyclopedia Britannica

The Uranium industry is the 5th best-performing industry in 2023, with a YTD return of 19.9%. While this industry’s performance lagged behind its Energy peers in 2022, it has outshone all of them in 2023, thus far.

The strongest performing Uranium stock on a YTD 2023 basis is Denison Mines (Ticker: DNN), a US$1.2bn market cap stock. The most well-known Uranium stock is Cameco (Ticker: CCJ) with a market cap of US$12bn.

This is an industry where its price performance remains very robust and is also one of the Top 3 strongest performing industries over a 2-week horizon.

This might likely be attributable to a recent BP report which sees demand for nuclear power to increase over the next decade.

Best-Performing Industries #4: Auto Manufacturers (Consumer Cyclical)

Source: Visual Capitalist

The auto manufacturers are the 4th best-performing industry in 2023, with a YTD return of 20.2%. Rebounding back from being one of the worst-performing industries over a 1-year horizon (-43% return), this particular industry consists of 36 stocks in its category, the largest of them being Tesla, with a market cap of US$526bn as of this writing.

However, the best-performing stock in this industry is a penny stock called Faraday Future Intelligent Electric, with a market cap of just US$470m. This counter saw its price shoot up by 172% so far in 2023.

Among the larger cap stocks with more than US$10bn in market cap, the top 3 YTD 2023 price performers in this industry are 1) Lucid Group (72% return), 2) Tesla (35.3%), and 3) Nio (23.3%)

However, the price momentum of this industry has slowed down over the past couple of weeks, managing just a 2% average return.

Best-Performing Industries #3: Internet Content & Information (Communication Services)

The internet content & information industry is the 3rdbest-performing industry in 2023, with a YTD return of 20.3%. Similar to the auto manufacturers, stocks in internet content & information had one of their worst years in 2022.

However, that fortune has reversed in early 2023, with this industry, which comprises 68 stocks, seeing stronger momentum of late.

Out of the 68 stocks in this industry, the largest of which (in terms of market cap) is Alphabet, followed by Meta and Baidu. These 3 blue-chip stocks have generated decent returns in YTD 2023, with Meta witnessing a YTD price rise of 22.2%, followed by Baidu at 21.1%, and lastly, Alphabet at 10.4%.

Other notable stocks in this list include Doordash (+15.9%), Spotify (+26.7%), Snap (+23.9%) Pinterest (+6.8%), and Match Group (+26.3%)

This industry’s momentum remains relatively decent over the past 2-weeks, up 3.6% on average, among the top 10 best-performing industries over the short term.

Best-Performing Industries #2: Internet Retail (Consumer Cyclical)

The Retail Internet industry is the 2nd best-performing industry in 2023, with a YTD return of 20.8%. However, the price momentum in this industry has weakened rather substantially over the past 2 weeks (0%).

The internet retail industry comprises 50 stocks, the largest of which is Amazon, followed by the China ADRs (Alibaba, Pinduoduo, and JD.com).

This industry has likely been boosted by the strong YTD performance of the China ADRs of late, particularly Alibaba, with a YTD return of 26.2%.

As earlier mentioned, this industry’s price performance has weakened over the past 2 weeks, ironically led by weakness now seen in the China ADRs.

Best-Performing Industries #1: Travel Services (Consumer Cyclical)

The travel services industry is THE best-performing industry in 2023, with a YTD return of 24.4%. This is likely led by positive sentiments stemming from the reopening of China, with many travel-related services key beneficiaries of this megatrend.

This particular industry comprises 16 stocks, with the largest being Booking Holdings with a market cap close to US$100bn, followed by Airbnb and Trip.com rounding up the top 3 in this category.

The stock with one of the strongest momentum in this industry is Airbnb and Expedia Group, both showing strong price gain over the past 2-weeks.

Out of the 5 industries listed in this article as having some of the best price-performance in 2023, 3 of them belong to the consumer cyclical industry, which shows that this sector remains the market favorite in 2023, thus far.

Some of the weakest industries in 2023 are those seen in the utility sector as well as Healthcare Plans, the latter being one of the most resilient industries historically.

Energy-related industries also have not fared well in 2023, with many of the related industries featured in the bottom half of the list. The uranium industry is, however, one interesting industry to keep a lookout for this year.

To read more of such articles, do head over to New Academy of Finance.

@Tigerstars

@CaptainTiger

@MillionaireTiger