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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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Worst Sector: Materials

CoalYTD Performance: +6%

With a strong dollar holding back commodity prices and China’s economy suffering a manufacturing slowdown, it hasn’t been fun to be a materials stock in 2013.

Base metals giant Southern Copper (SCCO) and coal king Peabody Energy (BTU) are both off a respective 30% and 40% year-to-date as a result of slumping demand and soft prices. Just about every other commodity stock in the materials sector is feeling the pain, too.

This isn’t likely to change anytime soon. What with the talk of tapering at the Fed and monetary policy that is likely to tighten, the greenback probably won’t be weakening and pushing up the cost of dollar-denominated materials like steel, aluminum, coal and copper.

Also, China continues to suck wind — and while a growth rate over 7% is certainly enviable, the expectations for higher growth and the lack of demand elsewhere will continue to punish materials stocks in 2013.

That could mean continued ugly results for funds like the Materials SPDR (XLB) and iShares Dow Jones U.S. Basic Materials (IYM).

Jeff Reeves is the editor of and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.

Article printed from InvestorPlace Media,

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