There’s a lot of uncertainty about where to invest money in Q4 as the S&P 500 is mired in fear and correction. Even though increasing fuel and raw material prices as well as freight constraints and labor concerns continue to put investors in a spot of bother, the brighter side of the spectrum cannot be overlooked. As a result of unprecedented demand levels throughout the whole economic system, a huge window of opportunity has opened for multiple companies. Specifically, we’ll look at three of the best industries to invest in, that are not only immune to many of the global supply-chain problems now affecting the market, but are also benefiting from the ongoing circumstances.
1 . The energy sector got a new life
It has been a difficult couple of years for the Energy Sector, which was initially struck by triple-digit profit losses in 2020 and is now experiencing a triple-digit spike in earnings this year. During the past quarter, Exxon (NYSE: XOM), the single biggest investment inside the XLE Energy Sector SPDR, had its revenue increase by 108 percent year over year, and we expect that trend to continue for a while. Increasing demand as a result of the economic turnaround and recovery, in addition to rising prices, will be the primary drivers of revenue growth.
Prices of WTI have just broken through a new six-year high, according to data, and are expected to continue to rise. What this means for investors is that sales and profits are very much there, but more significantly, free cash flow is on the rise. Due to this, this is one of the best and high-yielding industries to invest in, with share buybacks also on the cards in the near future.
2 . The semiconductor industry is crucial
A key component of today’s technology, as well as the global supply chain problems that are now being addressed, is the semiconductor industry. Large-scale shortages of semiconductors are affecting the production of components and finished goods. The automotive industry is the most obvious industry to be impacted by the microprocessor shortage, but it is not the only one to be affected. The industry is now putting out significant effort to catch up, but shortages seem to be becoming more acute. A faster transition to higher-performance microchips and integrated circuits is the need of the hour for the semiconductor industry, along with speedier production, optimized output, and an expansion in overall operations.
This industry, out of all those in the S&P 500, holds the greatest promise to deliver well beyond expectations. It’s our opinion that analysts are underestimating the underlying circumstances by anticipating growth from many of the semiconductor companies this quarter, but not all of them. It is, without a doubt, one of the best industries to invest in during Q4. There’s a buying opportunity now that the SOX Semiconductor Index (NASDAQ: SOXX) is down almost 10% heading into the earnings season.
3 . Employers are craving labor services
The labor market in the United States is tight, but firms are recruiting in large numbers, which is good news for companies like Cintas, Automatic Data Processing, and Paychex (NASDAQ: PAYX). Exempted from input costs connected with the sectors they serve, these companies have already exceeded their pre-COVID business levels significantly and have plenty of room to grow. Considering that economic revival has begun, and many companies are still experiencing underemployment, the prognosis for revenue and profits growth is promising. The recently released third-quarter results for Cintas and Paychex have been well beyond expectations and indicate a strong future ahead. Automatic Data Processing on the other hand is expected to release its report at the end of October. All three companies also pay out generous and increasing dividends.
There you go – that’s your three best industries to invest in during Q4. If you want to track the performance of your favorite symbols in the aforementioned industries, create a watchlist here. And don’t forget to follow our Youtube channel to view useful investing videos.