Welcome back to our Hypergrowth Investing podcast! In a rocky macro environment like the one we find ourselves in today, many are feeling the heat. With cracks forming in the banking sector, should you join investors in fleeing riskier assets to play defense instead?
Despite the widespread fear and macro risks, there are still ways to make great money in the stock market this year. We’ve got our sights set on four promising sectors – our Big 4: housing, clean energy, self-driving, and enterprise software.
Housing is top of mind right now because February’s home sales data was just released. And we’ve got one word to describe it – boom! Existing home sales were expected to rise about 5% month-over-month in February, and they popped 15% – three times what they were supposed to and the biggest jump in sales since July 2020, when we were climbing out of the COVID crash. And it’s all thanks to the decline in mortgage rates. We think those rates will keep rolling over as the Fed nears the end of its rate-hiking cycle. That should spark continued growth in the housing market.
Indeed, housing stocks have been on fire lately. And we think they’ll sustain that strength for the rest of the year.
Clean Energy Stocks
Now, how about clean energy? It’s been on a bit of a downtrend. But we think now it’s time to buy the dip and get aggressive once again. President Biden OKed a proposed oil drilling project in Alaska, and that made folks anxious that the U.S. government isn’t as gung-ho on clean energy as they thought. But, in fact, we view this as a positive development. The government realized that clean energy still needs some help from oil and gas, and we expect this approval will give the entire energy sector a boost, clean energy included.
Plus, while lots of clean energy funding was tied up in Silicon Valley Bank, there’s been a robust bidding war for those assets ever since the firm’s collapse. It seems this ship will right itself. And the sector’s recent selloff is offering a fantastic buying opportunity.
Now onto self-driving stocks – it’s no surprise that we’re really bullish on self-driving for 2023. Baidu (BIDU) just announced the rollout of its self-driving robotaxi service Apollo Go in Beijing. That marks the third Chinese city it’s expanded this service to. Autonomous delivery services are up and running in Texas and California. Luminar (LAZR) just struck a huge deal with Mercedes-Benz (MBGAF). And Innoviz (INVZ) also announced its own major deal with Volkswagen (VWAGY). Indeed, there’s a ton of good momentum going in the self-driving industry.
The sector’s major hurdle now is the cost to integrate high-quality tech into cars. But we believe the disinflation we’re seeing here in 2023 will help to push those input costs lower. And that should really help self-driving stocks to catch a bid this year.
Enterprise Software Stocks
And finally, enterprise software – there are two main types in this stack. You’ve got revenue-boosting software and cost-cutting software; and we’re fans of the latter. The theme we’re seeing in recent earnings reports is that companies aren’t altogether killing their spending, but they are cautious. And in tougher macro environments where businesses are neither failing nor thriving, companies will continue to spend on things that boost efficiency, like cost-cutting software.
And right now, enterprise software stocks are about as cheap as they’ve ever been. This is a really good play for 2023.
Catch this week’s full episode for a deep dive into the markets!
On the date of publication, Seth Kuczinski did not have (either directly or indirectly) any positions in the securities mentioned in this article.