The new year is here, and while many financial experts believe a recession inevitably lies on the horizon, the timing couldn’t be better to invest in a business. Not only are stocks down, but the inverse relationship between stock prices and interest rates means that rates are up, benefiting stocks in the long run as they will fall again in the future.
So, whether you’re looking to invest in or buy a business this year, here are the 7 sectors you should consider.
7 Sectors to Consider in 2023
Here are the leading business sectors of the 100 most popular stocks among hedge funds as of Q3 2022, a key indicator of more popularity to come in Q1 2023.
1. Computer Software
Prepackaged computer software is looking more desirable than ever in 2023. With high-margin business models and limited capital expenditures, be on the lookout for businesses in this sector.
One of the primary benefits of prepackaged computer software is its ample cross-selling opportunity across its products utilizing AI. Generating actionable intelligence for its customers, prepackaged computer software has a nearly endless amount of valuable personal data available at its fingertips.
2. Semiconductors
Despite shortages in the semiconductor industry, finance experts believe it will see unprecedented growth in the upcoming year. It’s anticipated that semiconductor businesses have the means to overcome any short-term headwinds they may currently be facing, positioning it for a new upcycle utilizing AI.
3. BioTech
It comes as no surprise that biotechnology is at the forefront of investment opportunities, considering the worth of the global pharmaceutical market valued at around $1.25 trillion today.
4. Electronic Data Processing (EDP)
EDP, or electronic data processing, is a term given to automatic information processing utilizing electronic devices. When investing in EDP businesses, compelling opportunities may arise in options with a large addressable market, robust free cash flow generation, and consistent growth at scale.
5. Medical Specialties
COVID-19 brought with it numerous changes to the global market, including creating nearly unlimited investment opportunities. As the sector continues evolving into the future, we look back at how healthcare transformation accelerated by a decade a minimum over the course of the pandemic.
6. Business Services
The three main areas within the business services sector include business-to-consumer (B2C), social, and business-to-business (B2B). In the upcoming three years, the business services sector is anticipated to see growth to the tune of $214+ billion.
Investors looking to enter the business services sector should look for companies that significantly make it hard to disintermediate them.
7. Major Banks
If you want to invest in areas that can handle market volatility, seek out diversified, well-capitalized, large banks. Although much of the banking industry will also feel the effects of the fragility of the market in 2023, major banks should be able to offer more security.
Conclusion
These are the top 7 business sectors to consider in 2023, but, of course, it’s important to keep an open mind as to where you invest.
Thankfully, for those who are eager to dip their toes in and are looking into buying a business, you’ve got options. There are various small business grants available if you’re seeking financial support.
