As useful as it can be for investors to look back at what worked for them in 2012, most traders at this time of year are more interested in the best investing ideas for 2013 – and beyond. Needless to say, this is a daunting task, since a bevy of issues – from the impending fiscal cliff or still-high unemployment in the US, to the cloudy economic picture in Europe and emerging markets – can have a huge impact on investment performance.
That said, there are some industry and consumer trends that could be strong candidates to reward investors in 2013. Here are just a few that could be worth investigating:
One unfortunate event of 2012 whose effects could continue to be felt in 2013 was Hurricane Sandy. Damage estimates now sit at $70 billion in New York and New Jersey alone and could still rise further as the full extent of the devastation is discovered. While tragic, this could lead to a reconstruction boom in the Northeast, which, combined with signs of life in the housing market, could provide a far stronger tail wind then expected in 2013 to the companies who supply the products and services necessary to rebuild the affected areas. Companies, such as home improvement retailers, roofing suppliers, and self-storage operators, could benefit from an extensive rebuilding and renovation period.
One investment alternative is the Rebuilding Sandy motif, which focuses on companies such as home improvement companies, roofing suppliers, and self-storage companies.
It was a strong year for generic drug manufacturers as they benefited from the patent expirations of blockbuster drugs such as Plavix and Seroquel. Next year could be even better, as an additional $290 billion in branded drugs are due to come “off patent,” and generic drug makers are hoping to benefit from the implementation of Obamacare. These developments could increase the number of insured patients eligible to receive insurance coverage and put a premium on cost containment, both of which could come to the aid of generic drug makers.
One possible way to invest is our Drug-Patent Cliffs motif is a portfolio of stocks of generic drugmakers.
One thing we learned during the Great Recession of 2008 and 2009 is that almost irrespective of economic conditions, the amount consumers seem willing to spend on their pets continues to grow. Pet supplies were one of a very small group of retail categories that has grown in each of the last 10 years. This is even more remarkable when you consider that this industry is closely tied to the housing market, which has been in the doldrums since 2007. With pet adoptions tied to house buying and both the housing market and pet adoption rates showing signs of ticking back up, pet-related stocks, could benefit from these nascent trends in 2013.
One alternative is our Pet Passions motif, which is a portfolio of stocks of companies that make and sell pet-related products and services.
New Car Sales
Next year could see consumers — either through choice or necessity — opting for a new car. Certainly, the conditions are in place for this to occur. The average age of the US auto fleet is now 11.1 years — an all-time high — so consumers may finally reach the point where replacing the car is cheaper than continuing to maintain it. This combined with record low interest rates and improving credit conditions could mean 2013 may be the year when consumers take the plunge and replace their old clunkers.
Our That New Car Smell motif is focused on companies that do business in new-car manufacturing and sales.
About 2.5 quintillion bytes of data is being created and stored around the world every day. It’s proliferating so quickly, that according to IBM, 90% of all the data in the world today has been generated in the last two years. Mining this data for insights into future customer behavior can be extremely valuable to companies around the globe and is leading to huge investment in “big data.” Market research firm Gartner estimates that IT spending on this area will increase from $28 billion this year to $34 billion in 2013. This could create a growth opportunity for the companies with products helping to store, organize and mine this treasure trove of information. That, in turn, could benefit companies focusing on big-data technologies.
Our Big Data motif is a portfolio of stocks of companies that sell related technologies and services.
Those are just a few ideas, and we’d love to hear more from you. What trends or developments do you think could become the biggest investing ideas of 2013?