I love cars and thoroughly enjoyed another year at the Barrett-Jackson auction. The event reminded me to take another look at the automobile sector, where it’s been and where it may be headed.
Zoom, zoom . . .
Investing in something you love can be great fun and hopefully profitable. Is it time for auto lovers to look at the sector?
Automobiles fall under the Consumer Discretionary sector which is currently ranked as “over-weight” by Standard & Poor’s meaning certain growth investors may want to take a look.
On the manufacturing side, you’re likely to find investors interested in Ford (F), General Motors (GM), Nissan (NSANY) and Toyota (TM).
Retail companies such as Advance Auto Parts (AAP) and O’Reilly Automotive (ORLY) are popular right now too.
Sales in 2013 may not keep pace with 2012 but slower, steady growth is likely (3-5%) per year over the next few years according to reasearch analysts.
Investing in a particular sector is always riskier than maintaining a more diversified portfolio so be sure and consult with an advisor before doing so and be careful to avoid placing more than 10% in any one sector.
Tradition plays a role in how many families invest. Even after the turmoil of the past decade, investors tend to be loyal to the industries and sectors their families have supported in the past.
One of the best ways to stay interested in your portfolio or to encourage younger members of your family to get busy investing is to seek out those firms you can be passionate about. Start a new tradition or carry one on.
I bring this up because helping investors do this type of research is a rewarding part of what I do. Don’t be shy, let me know your interests. I’ll keep them in mind for you.
Until next week,
Susan R. Linkous
Opinions expressed above are for general information only not specific advice. Consult your advisor to determine appropriateness for you. All references to performance are historical and no guarantee of future results.