Top Stocks in All 11 Stock Market Sectors

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All investments involve some degree of risk, especially investments in the stock market. That’s why diversification is a bedrock principle of investing.

Diversification simply means spreading out risk by owning several different stocks that might perform independently from each other. Diversification can be accomplished by buying companies that sell different products and services or buying stocks that operate in different geographic regions of the world. Another effective method of diversifying a portfolio is investing in one or more stocks from every commercial sector.

What Is a Sector?

Wall Street organizes stocks into sectors based on their industries and the customers they serve. Sectors are broad categories or groups organized around a general industry or segment of the economy. The information technology sector, for instance, will include companies that make computer hardware as well as firms that produce software or offer computer or information technology services. The health care sector, as another example, encompasses pharmaceutical companies, medical device makers and other related firms.

Sectors are important to investors because each economic and industrial sector can react differently to the market and economic fluctuations. A sector’s performance is a reflection of its own unique set of conditions. Diversifying a portfolio by including stocks from several sectors can be an effective risk mitigation strategy.

What Are the 11 Investment Sectors?

To keep things standardized and reduce confusion, the entire financial industry uses a specific, predetermined set of sector categories called the Global Industry Classification Standard, or GICS.

The GICS has been around for 25 years and has proven to be a useful and reliable industry standard.

In accordance with the GICS, there are 11 sectors. They are:

What Are the Top Stocks in Each of the 11 Sectors?

There are over 5,000 publicly traded stocks listed on major U.S. exchanges such as the New York Stock Exchange and the Nasdaq. With so many stocks actively trading in 11 different sectors, choosing the right one to buy today can be a challenge.

Ultimately, only you can determine which stocks are right for you. As a starting point, however, here is a list of one top stock from each of the 11 different GICS sectors:

Stock Sector Industry
PPG Industries Inc. (ticker: PPG) Materials Specialty chemicals
Emerson Electric Co. (EMR) Industrials Machinery
Franklin Resources Inc. (BEN) Financials Asset management
Exxon Mobil Corp. (XOM) Energy Oil and gas
Lowe’s Cos. Inc. (LOW) Consumer discretionary Home improvement
International Business Machines Corp. (IBM) Information technology Technology services
Comcast Corp. (CMCSA) Communication services Cable and satellite
UnitedHealth Group Inc. (UNH) Health care Health insurance
Colgate-Palmolive Co. (CL) Consumer staples Household products
NextEra Energy Inc. (NEE) Utilities Electricity
Essex Property Trust Inc. (ESS) Real estate Multifamily

Sector: Materials
Industry: Specialty chemicals

Pittsburgh-based PPG is a $31.8 billion paint, coatings and specialty materials company that manufactures and sells industrial adhesives, sealants and coatings in North America, Latin America, Europe and other regions around the world.

The company’s performance coatings division serves the automotive and transportation industry, offering solvents, sealants, paints and other products used in the repair and refurbishing of cars and trucks. This division also provides paint and specialty chemicals and products used in large-scale pavement projects such as military and commercial airfields.

PPG has another division called the industrial coatings segment that caters to the agricultural and construction industry.

Although PPG is primarily a chemical company that’s prominent in plastics, paints and coatings, investors may be surprised to learn that it has a large and expanding presence in the software industry. As a tie-in to its automotive paint and solvent business, it provides software solutions to the automotive repair industry.

Wall Street is predicting healthy revenue growth from PPG. Analysts are looking for $18.5 billion is revenue in 2024 and expect that to grow 3% to $19.1 billion in 2025.

Sector: Industrials
Industry: Machinery

EMR has a market capitalization of $65 billion and has been experiencing excellent revenue growth for a company of that size. In 2023, the company took in $15.2 billion in revenue, which represented a 9.9% increase over the previous year. Wall Street is looking for $17.5 billion in revenue in 2024. If EMR can reach that level, it would be an increase of over 15%.

The company provides a wide variety of electrical products ranging from tools to gauges, valves, industrial switches and even software. It operates around the world, with concentrations in North America, Asia, the Middle East, Africa and Europe.

On May 9, Deutsche Bank expressed confidence in EMR by upgrading the stock from “hold” to “buy.” Income investors will be encouraged to know that EMR is a member of the Dividend Aristocrats index and has increased its dividend payout for 27 consecutive years. The stock’s current annualized dividend is $2.10 per share, which equates to a yield of 1.8%.

Sector: Financials
Industry: Asset management

BEN is not a flashy company, but it is nonetheless one of the largest and most well-respected money managers in the world. On Jan. 31, BEN reported $1.6 trillion in preliminary month-end assets under management, an increase from the $1.4 trillion it had reported the previous month.

This $12.8 billion company is expected to generate $6.5 billion in operating revenue in 2024, and Wall Street is looking for $6.9 billion in 2025. That would be 6% year-over-year revenue growth if those numbers can be achieved.

In April, BEN announced it is making a push into private investments such as private equity and debt securities. It is making this move to further diversify its business model and protect itself from fluctuations in the mutual fund markets.

Of interest to income-oriented investors is the fact that BEN has a trailing-12-month dividend yield of 5%.

Sector: Energy
Industry: Oil and gas

XOM is a $527 billion mega-cap energy company that is an established leader in all aspects of the world’s energy markets. The company is prominent in the production, storage and distribution of traditional hydrocarbon energy sources like oil, gasoline and natural gas, and it’s making significant moves into sustainable energy.

In addition to fuels, XOM manufactures and distributes a large variety of specialty chemicals that are derived or are by-products of the crude oil it processes. These chemicals include solvents and lubricants that are used extensively by industrial and retail customers.

In 2023, XOM fell a little short of earnings and revenue estimates, producing $334 billion in revenue and $8.89 in earnings per share. Analysts adjusted their forecasts accordingly. This year, Wall Street is looking for $9.17 in EPS on $350 billion in revenue.

On May 14, XOM announced a dividend of 95 cents per share, which will be paid on June 10. The 12-month yield for the stock works out to 3.2%.

Sector: Consumer discretionary
Industry: Home improvement

LOW has a storied history in the hardware and home improvement business. The company was founded in 1921 in a small town in North Carolina. Back then, it had only one tiny location that catered to the local community. Today, LOW has more than 1,700 big-box stores and a market cap of $132 billion.

LOW sells just about anything a homeowner or building contractor could possibly need for the construction, rehab or maintenance of a residential property. Because of its strong reputation and prime locations all over North America, LOW is expected to take in more than $84 billion in revenue and report $12.18 in EPS.

Unfortunately for LOW and other housing-related stocks, interest rates remain stubbornly high. This affects mortgage rates which, in turn, affect home sales. LOW is particularly vulnerable to fluctuations in the housing market, and its performance will reflect this reality. The good news is that mortgage rates are cyclical, and when they eventually drop it will be a positive catalyst for LOW.

Sector: Information technology
Industry: Technology services

Founded in 1911, IBM can truly be considered a pioneer in the technology industry. It began by building and selling tabulating machines and mechanical cash registers in the early 20th century and has evolved to become a premier provider of integrated, high-tech solutions to customers across the globe.

IBM is determined to become a leader in the emerging science of artificial intelligence (AI) and is already developing comprehensive AI platforms and products for international clients in business and finance. The company offers hardware and software solutions for physical locations, as well as for use in cloud computing and cloud data storage.

Additionally, IBM has a booming financial division that offers installment financing for its products and services. The company’s four divisions – software, infrastructure, consulting and finance – will combine to generate an estimated $63 billion in revenue in 2024 and close to $66 billion in 2025. That’s impressive when you consider that IBM has a market cap of $154 billion.

Sector: Communication services
Industry: Cable and satellite

CMCSA is a Philadelphia-based company in the communications sector with a market cap of $154 billion. Many consumers consider it a regional television service provider, but CMCSA is much more than that.

CMCSA operates all over the world, wherever people consume media and entertainment. It is active in broadband internet services, cable and satellite TV, mobile and landline telephone services, and entertainment.

Comcast owns the NBCUniversal brand of entertainment companies and generates significant cash flow from its Universal theme parks in the U.S. and Asia.

This incredibly diverse business model helped Comcast generate over $121 billion in revenue in 2023 and, according to current Wall Street estimates, will contribute to the $124 billion it is expected to earn in 2024.

In a research report published April 29, Citigroup reiterated its “buy” rating for CMCSA stock.

Sector: Health care
Industry: Health insurance

A large percentage of the $398 billion in revenue UnitedHealth is expected to generate in 2024 will come from the consumer health insurance plans it provides to workers through employers. And while that is a primary business, it is by no means all UNH does.

UNH is a diversified health care company that, in addition to health and dental insurance, offers comprehensive care management services. Additionally, it provides targeted software solutions to its clients in the health and wellness industries.

Health insurance and related health care services are highly resistant to adverse economic changes. Consumers will maintain insurance coverage and generally won’t cut corners on health care regardless of economic conditions. This is good news for UNH and other companies in the sector.

UNH has a market cap of $476 billion and a 12-month forward dividend of $7.52 per share, which amounts to a yield of 1.5%.

Sector: Consumer staples
Industry: Household products

Colgate-Palmolive currently has an impressive market cap of $77 billion and is projected to earn $3.50 in earnings per share on $20 billion in revenue for its fiscal 2024. These financials are considerably higher than the $19.4 billion in revenue and $2.77 it reported in 2023.

Based on the strength of its well-known brands in the soap, detergent and oral hygiene product areas, CL has become an iconic American company. And, while it is most famous for its household consumer products, CL is well established in the pet food industry as well.

North America is responsible for most of the company’s sales, but it is strong in Latin America and Europe and has a significant presence in Africa.

Colgate-Palmolive is a mature company, so investors should not expect explosive growth or extraordinarily rapid capital appreciation. CL is a stock well-suited for investors looking for steady long-term performance and regular dividend growth.

On March 14, the company’s board of directors raised the stock’s dividend 4% from 48 cents a share to 50 cents a share. This translates to $2 per share per year, and equates to a 2.1% forward yield based on the current share price.

Sector: Utilities
Industry: Electricity

Wall Street is looking for 10% revenue growth from NextEra over the course of this year and next. Analysts estimate that this Juno Beach, Florida-based electric utility will record $26.6 billion in 2024 and grow that to $29.4 billion in 2025.

NEE generates and transmits electric power to residential and business customers in southern Florida. Its impressive revenue growth projections are a reflection of the rapid population growth in the communities it serves. In addition to its retail business, NEE wholesales its surplus electricity to other utilities in the southern U.S.

To cut down on its carbon footprint, the company uses solar panels and wind turbines as well as traditional methods to generate the electricity it sells.

NEE has about 12 million customers in South Florida, on both the west and east coasts of the state. NextEra is a regulated utility that has the capacity to generate more than 33,000 megawatts of power.

The stock pays an annualized dividend of $2.06 a share, which works out to a 12-month yield of 2.7%.

Sector: Real estate
Industry: Multifamily

The multifamily, or apartment building, class of the commercial real estate sector is booming. This is due to a prolonged housing shortage and high mortgage rates that are forcing many potential homeowners to rent apartments instead of buying homes.

ESS is a real estate investment trust, or REIT, with a healthy market cap of just over $17 billion. The company is headquartered in San Mateo, California. Its real estate holdings are spread out over California and the Pacific Northwest. The company is not necessarily averse to expanding eastward, but the West Coast is its area of expertise.

On May 1, ESS reported its financial results for the first quarter of 2024 and Wall Street was impressed. The company turned in $3.83 in earnings per share, which beat the consensus estimate of $3.74, and was 4.9% higher than the same quarter last year. ESS managed to beat on revenue as well. It reported $426.9 million in receipts, which was a full percentage point higher than the consensus of $422.4 million, and up 3.5% over the first quarter of 2023.

Additionally, ESS has a 12-month yield of 3.7% and has raised its annual dividend for 30 consecutive years.

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