2022 was a wild ride, and 2023 is shaping up to be more of the same.
The silver lining is that, recession fears aside, the markets are now acclimating to a world of above 0% interest rates.
Despite the Fed promising to keep interest rates higher for longer, the markets are right now showing signs that they can handle the added pressure.
WIthout a doubt, some sectors will likely continue to fare poorly (looking at you, Big Tech).
However, there will also be winners. So, let’s look at a few of the industries where we believe these winners will emerge from in 2023:
Winning Sector #1: Semiconductors
The CHIPS Act of 2022 gave us a glimpse of what 2023 will bring. American dependence on foreign production of semiconductors is a disastrous national security problem. We simply can’t outsource the most critical component of our economy and military.
The CHIPS Act banned certain types of chips from being exported to China. It also authorized $10 billion to be spent to boost domestic chip manufacturing within America’s borders.
As competitiveness continues to ramp up between the U.S. and China, the semiconductor industry will continue to be front and center. Companies like NVIDIA Corporation (NASDAQ: NVDA) will likely be safe havens for investors who are less risk-averse.
However, investing in smaller, earlier stage domestic chip companies will offer investors who have a higher risk appetite more return potential. Companies like Axcelis Technologies (NASDAQ: ACLS) and Skywater Technology (NASDAQ: SKYT) could very well offer money-doubling opportunities in 2023.
Winning Sector #2: Healthcare
2022 was a bumpy ride for healthcare stocks. Rising costs, COVID strains, and staffing shortages wrecked havoc through the industry. However, 2023 will likely see a reversal in these fortunes.
Especially is the United States does enter a recession. No matter how bad the economy gets, people will still get sick, require surgery, and buy their prescription medications. This means that healthcare stocks are recession-resistant. Not only that, but after being battered for all of 2022, many healthcare stocks are at attractive valuations.
There’s a ton of ways to play the healthcare industry. You can invest in pharmaceutical stocks like Pfizer (NYSE: PFE), which looks poised to continue its post-COVID growth. Another idea is to invest in the hospitals themselves. Companies like Community Healthcare Trust (NYSE: CHCT) and Caretrust REIT (NASDAQ: CTRE) allow you to invest in the hospitals and care facilities themselves, and collect a dividend in the process.
Winning Sector #3: Renewable Energy
It’s no secret that the Biden administration wants to force Americans to transition to green energy. While their ability to do this seems dubious at best, one thing is irrefutable:
They are pouring billions of dollars into renewable energy. The Inflation Reduction Act authorized $374 billion be spent on various clean energy initiatives over the coming years. And when you have billions of what’s essentially free money flowing into any industry, profits are soon to follow.
The ways to play renewables are virtually endless. You can invest in solar panel manufacturers like First Solar (NASDAQ: FSLR). Other companies like NextEra Energy Partners (NYSE: NEP) can give you exposure to a wide portfolio of clean energy projects in wind, solar, and natural gas.