The stock market was on fire in 2013 across the board, but the very best stocks to buy this year came from decidedly “risk on” sectors.
Consumer discretionary stocks, for instance, are up about 36% vs. a 25% gain for the S&P 500 this year — led by roughly 55% gains in e-commerce giant Amazon (AMZN) and 50% gains in coffee king Starbucks (SBUX). Investors thought these plays were the best stocks to buy earlier this year on hopes of a recovery in consumer spending and lower unemployment — and they have been right.
On the other hand, sleepy sectors like utilities and telecoms have lagged. The Utilities SPDR (XLU), for instance, is up only 9% on the year. That’s partly because these low-risk sectors were bid up during more rocky periods for the market in the past few years, so valuations are stretched right now. But it’s also because investors were on the offensive instead of on the defensive in 2013.
So where can investors find the best stocks to buy in 2014? Typically the sectors that lead one year do not lead the next … so where is the money going to go?
Here are three sectors to watch in the new year that may attract the most cash and boast the best stocks to buy in 2014.