Yesterday the S&P jumped up 136 points after a strong bear run in which the major indices around the world have retreated from all-time highs. A 5% plus pull back from record highs continues to fuel concerns that the global economy could be slowly plunging into recession. While most of the corrections have come at the backdrop of growing concerns about the Coronavirus, most equities were due for a much-needed correction on running ahead of fundamentals.
Amidst the ongoing turmoil in the stock market, some investors are still making money in the market as some sectors tend to outperform in such times of uncertainty. Below are some of the sectors to pay close watch to even as the stock market continues to show signs of weakness.
Many investors are asking what stock sectors to buy if the stock market continues crashing. The answer is that pharma stocks are best choice, but there are many other stock sectors to look at. Investors should research the company’s financials before investing.
The health care sector is one of the few sectors in the capital markets that tends to do well in times of uncertainty or turmoil in the financial markets. Part of the reason has to do with the fact that people will always buy medication and pay for various treatments even when the global economy is not doing well.
Likewise, the industry has continued to show steady, and long term upswing amidst the health scares that have continued to grip the world. The emergence of life-saving as well as life-enhancing capabilities has seen a number of stocks continue to outperform the overall industry.
Amidst the havoc causing Coronavirus, now may be the best time to bet on drug companies as well as biotech companies as they are likely to continue to outperforming the overall stock market. Likewise, it might be wise to gain exposure to the industry by investing in healthcare-focused exchange-traded funds.
We have seen HUGE increases of pharma stocks in the last couple of weeks. Here are a couple we have reported on:
- Forty Seven (FTSV) Stock Soars 61% On Gilead (GILD) Buy Offer
- Cocrystal Pharma (COCP) Stock Rises 60%
- Alpha Pro Tech (APT) Stock Skyrockets 341% on Coronavirus Face Masks Orders
- Moderna (MRNA) Stock Soars Over 20% on Coronavirus Vaccine
- Novavax (NVAX) Stock Climbs On Coronavirus Vaccine News
Natural Resources Focused Companies
The natural resources sector is mostly made up of companies engaged in the provision of natural resources to the economy. The sector includes companies engaged in exploration and mining activities. Companies engaged in the mining of precious metals are some of the best to invest in when the overall market is in a downturn.
Gold and Silver stocks tend to outperform the overall market in times, geopolitical tensions, or macroeconomic fears. This is because the two precious metals are often treated as a safe haven for storing wealth in times of uncertainty.
Likewise, gold and silver prices tend to rise consequently allowing gold and silver companies to
make huge sums of money from their mining operations.
Similarly, the natural resources sector tends to do well when the global economy is coming out of recession as demand for raw materials tends to spike leading to a spike in prices, which leads to higher revenues.
The technology sector is an all-weather economic sector that can shrug off declines in a market fall. While geopolitical tensions between superpower can trigger sell-offs in the broader stock market, companies engaged in the development of weapons, among other hardware used in warfare, tend to outperform the overall market. Similarly, companies engaged in the development of revolutionary technologies may come under pressure in times of uncertainties in the global scene.
Therefore it is important to have a clear idea of which stocks to invest in when it comes to gaining exposure in the technology sector. The use of exchange-traded funds can come into play as financial products come with high levels of diversification that allows some segments of the sector to shrug off losses from another sector.
The financial sector is one of the sectors to avoid in times of economic uncertainty. Financial service companies tend to underperform in times of recession as demand for financial services tends to decline substantially.
In a rising economy, especially after a recession, the financial sector is arguably one of the best as demand for financial services such as loans as well as insurance services tends to increase substantially.
Ruchi has an Accounting and Graduate Degree in Business from the International School and Business and Media. She is exceptionally skilled in financial databases like Bloomberg, ThomsonOne,Datastream, CapitalIQ, and Factiva. Her focus at AlphaBetaStock.com is research breaking stocks and investment stories.