Best Sector #1: Energy Stocks
But upbeat economic indicators could change the demand picture big-time in 2014, so energy plays could be the best stocks to buy in the new year.
Upbeat job news continues in the U.S., with a sharp dip in unemployment to 7% in November on better-than-expected job creation. Not only is this news great on its face, but the details show even more momentum considering it illustrates strength for the labor market even across the disruptions of a government shutdown.
Furthermore, we just learned U.S. GDP grew at a 3.6% rate in Q3. While some of this was indeed due to inventory growth, the better-than-expected pace here is also encouraging.
Energy is a very cyclical sector, and stocks in this area of the market have largely sat out the rally. Take oil major Exxon Mobil (XOM), which is up just around 10% year-to-date in 2013, as one example.
However, improving demand could boost both total consumption as well as prices in 2014.
If you believe in a cyclical recovery taking shape in 2014 and into 2015, now is the time to get into energy — particularly if you like the dividend potential of stocks like XOM, which pays a 2.7% yield and has increased its payouts for 31 consecutive years.