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The 2 Best (and 2 Worst) Sectors to Buy Now

2013's hottest and coldest stocks could be in for more of the same

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Second-Worst Sector: Utilities

electrical outlet 630YTD Performance: +10%

All that hunger for yield that we saw a year or two ago has seemed to fall by the wayside as hot utility stocks have dramatically underperformed this year. Returns for this segment of Russell 3000 stocks average just about 10%.

Larger players like Exelon (EXC) and Duke Energy (DUK) are flat at best, and smaller regional players like Wisconsin Energy Corp (WEC) have significantly underperformed in 2013 — even when you bake in dividends that range as high as 4.6%.

The utility sector saw a huge run across 2011 and early 2012, but investors clearly have moved on to other opportunities in 2013. That trend will likely only continue, especially now that interest rates might be on the rise and yield is available elsewhere.

Still, those hoping for a bounceback can play utilities through funds like the Utilities SPDR (XLU) or the Guggenheim S&P 500 Equal Weight Utilities ETF (RYU).

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