11 Stock Market Sectors Ranked By 2020 Performance

Credit: InvestmentZen / www.investmentzen.com

Seeing if a stock is on the up after the fact is easy, knowing why is the challenge. One of the best quick-look tests is to compare gains/losses against stock market sectors.

For example, if your stock is soaring while most others in the sector are tanking, its likely going to have some gains because it will suck up investors and push supply and demand.

Alternatively, if your stock is following the sectors trend, you know its going to retain existing value because there’s a status quo.

Knowing about your stock’s sector and keeping an eye on it is just part and parcel of doing your due diligence.

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First up…

What is a stock market sector?

Each company has a product, service, function. These functions are categorized into sectors. For example, all banks are part of the finance sector. This is how it is usually grouped in stock market sectors too. According to the most commonly used system (Global Industry Classification Standard), there are 11 stock market sectors.

This is how the 11 stock market sectors are doing in 2020 compared against 2019 (% as of September 28, 2020):

11. Energy, -48.56%

  • Companies in the energy sector explore, produce, refine, and market fuels such as oil, natural gas, and coal.
  • Every company associated with the above, whether selling equipment to explore natural gas or refine oil, is also considered part of the energy sector.
  • For example, companies include Exxon Mobil Corp. (XOM), Kinder Morgan (KMI), and Halliburton Co. (HAL)

10. Financials, -15.59%

  • Companies in the financial sector deal with money, whether that be banking, capital markets, consumer finance, financial services, insurance, mortgages, or thrifts.
  • When the finance sector collapses, others usually follow. This is one reason why the government bailed out several banks during the 2008 financial crisis (and why they’ve done so several times in the past).
  • For example, companies include Bank of America Corp. (BAC), Visa (V), and PayPal Holdings (PYPL).

9. Real Estate, -11.42%

  • Companies in the real estate sector include equity real estate investment trusts, and real estate management and development.
  • One of the fastest-growing sectors in recent decades is real estate. With gains of around 97% since 2007.
  • For example, companies include Redfin Corp. (RDFN), American Tower Corp. (AMT), and Simon Property Group (SPG).

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8. Utilities, -8.97%

  • Companies in the utility sector include electric utilities, gas utilities, renewable electricity producers, and water utilities.
  • This highly regulated sector means the government keeps profit in check. Ensuring massive monopolies don’t charge ridiculous amounts for provinces that aren’t near water or power-plants.
  • For example, companies include NextEra Energy (NEE), Duke Energy (DUK), and Exelon Corp. (EXC).

7. Industrials, -0.69%

  • Companies in the industrial sector include aerospace, defense, air freight, airlines, building products, commercial services, construction, engineering, industrial conglomerates, machinery, marine industries, road, rail, and transportation infrastructure.
  • The industrial sector includes many iconic blue-chip U.S. companies and an ideal place to do due diligence for long-term stock investments.
  • For example, companies include Lockheed Martin Corp. (LMT), General Electric Co. (GE), and Caterpillar (CAT).

6. Consumer Staples, +4.07%

  • Companies in the consumer staples sector include beverages, food retail, food products, household products, personal products, and tobacco.
  • Due to the fact people always need products like toilet paper, soap, shampoo, etc., companies classed as offering consumer staples can make good long-term investments. That’s if they’re a popular and trusted brand or premises. So always do your due diligence.
  • For example, companies include Coca-Cola Co. (KO), Procter & Gamble Co. (PG), and Walmart (WMT)

5. Materials, +8.63%

  • Companies in the materials sector include chemicals, construction, containers, packaging, metals, mining, and forest products (paper).
  • If the company turns raw materials into useful components, whether processed or natural, it is likely part of the materials’ stock market sector.
  • For example, companies include Vale S.A. (VALE), Ecolab (ECL), and Rio Tinto (RIO).

4. Health Care, +14.45%

  • Companies in the health care sector include biotechnology, equipment, supplies, providers, technology, life sciences, and pharmaceuticals.
  • Health care falls into two categories, the application of services, technology, and medicine, or the creation of services, technology, and medicine. Like a few other sectors, health care is growing faster than the national economy.
  • For example, companies include Abbott Laboratories (ABT), Johnson & Johnson (JNJ), and Pfizer (PFE).

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3. Communication services, +14.73%

  • Companies in the communication services sector include telecommunications, entertainment, interactive media, media, and wireless telecommunications.
  • This sector is defined as media companies that also facilitate communication. It had to be defined as such as major companies that offered communication unified to provide internet, TV, mobile, and now even develop content for platforms.
  • For example, companies include Comcast Corp. (CMCSA), Walt Disney Co. (DIS), and Verizon Communications (VZ).

2. Consumer Discretionary, +26.02%

  • Companies in the consumer discretionary sector include communication equipment, electronic equipment, components, IT services, semiconductors, software, technology hardware, including storage and peripherals.
  • Also known as the consumer cyclical sector, it encompasses everything that isn’t a day-to-day consumer necessity.
  • For example, companies include Carnival Corp. (CCL), Grubhub (GRUB), and Lululemon Athletica (LULU).

1. Information Technology, +43.32%

  • Companies in the information technology sector include automobile components and services, distributors, consumer services, hotels, restaurants, leisure, household durables, internet marketing, direct marketing, multiline and specialty retail, plus textiles, apparel, and luxury goods.
  • Geographically dominated by Silicon Valley, the information technology sector is the #1 stock market sector so far this century.
  • For example, companies include Apple (AAPL), Cisco Systems (CSCO), and Intel Corp. (INTC).

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