5 Best Sectors To Invest In Long-Term

3. Consumer Cyclical

Number of Companies: 14

Consumer Cyclical is one of the best sectors to watch. In the second quarter of 2023, the US Morningstar Consumer Cyclical Index performed better than the overall market, surpassing it by 260 basis points. The median stock in the consumer cyclical sector is undervalued, trading at an 18% discount to their fair value estimates. Additionally, 52% of the coverage in this sector is considered to be in 4- or 5-star territory, according to Morningstar. 

Amazon.com, Inc. (NASDAQ:AMZN) is the preferred consumer cyclical stock among the hedge funds tracked by Insider Monkey. On July 25, Amazon.com, Inc. (NASDAQ:AMZN) and iRobot Corporation (NASDAQ:IRBT) reached an agreement to modify their merger deal, adjusting the price per share. As per the new terms, Amazon will now pay $51.75 per share to iRobot, which is lower than the original acquisition price of $61.00 per share. 

According to Insider Monkey’s first quarter database, 243 hedge funds were bullish on Amazon.com, Inc. (NASDAQ:AMZN), compared to 240 funds in the earlier quarter. Harris Associates is a significant position holder in the company, with 22.8 million shares worth $2.3 billion. 

The Ithaka Group made the following comment about Amazon.com, Inc. (NASDAQ:AMZN) in its second quarter 2023 investor letter:

“Founded in 1994, Amazon.com, Inc. (NASDAQ:AMZN) has evolved from its early roots as an online bookstore to become one of the world’s largest eCommerce retailers. At the end of 2022 Amazon stood poised to capture ~40% of all US e-commerce sales, representing five times more share than the next closest competitor. In addition to eCommerce, Amazon Web Services (“AWS”) has become the market leader in outsourced cloud infrastructure. Further, Amazon Advertising is garnering significant share in digital advertising, particularly product placement ads, thanks to consumers beginning their product searches on Amazon’s site. Despite providing tepid forward guidance on its 1Q23 earnings call, Amazon’s stock appreciated on the back of increased confidence the company would be able to contain expenses and push operating margins above prior peaks in the near-to medium term.”