Hottest Sectors to Invest in Today

Jan 19, 2021 11:23 PM ET
Hottest Sectors to Invest in Today

The stock market has had an excellent run in the past decade. In total, the S&P 500, Nasdaq 100, and Dow Jones have more than doubled. And individual stocks have continued to fire on all cylinders as well. For once, companies like Nvidia (NVDA), Tesla (TSLA), and Shopify (SHOP) are now some of the biggest firms in the world. In this article, we will look at some of the hottest sectors you should invest in today.

S&P 500, Nasdaq 100, and Dow Jones 5-year performance

S&P 500, Nasdaq 100, and Dow Jones 5-year performance

Electric Vehicle Market (EV)

The global automobile industry is a large one. Every year, companies like Toyota, General Motors, Ford, and Volkswagen sell more than 80 million cars. They generate billions of dollars in revenue and profit, with most of these companies returning their money to investors through dividends and buybacks. 

At the same time, the auto industry is going through substantial changes, with the world quickly transitioning to electric vehicles. This change is happening mostly due to the overall awareness of the risks posed by climate change. Subsequently, many countries have announced their plans to ban oil cars in the next few decades.

Electric vehicle companies are, therefore, doing extremely well. For example, Tesla is now valued at more than $700 billion, making it the fifth-biggest company in the United States. Indeed, its market cap makes it worth more than all other automakers combined. 

Tesla is not the only one. A company like Nio, which sells less than 100k cars annually, is worth more than $70 billion, making it worth more than Ford. Most interestingly is a company known as Quantumscape that is building solid-state battery technology. The company has never sold a product, but it is worth more than $50 billion. 

There are many other high-flying companies that are in the electric car industry that you can invest in, including Switchback Energy, Blink Charging, and Newborn Acquisition. 

Nio, Tesla, Quantumscape

Nio, Tesla, Quantumscape

Fintech industry

The financial technology industry, also known as fintech, is also one of the hottest sectors you can invest in today. The industry deals with many aspects that are changing how people deal with their money. For example, companies like Square and Shift4Payments are simplifying how companies get paid.

Similarly, companies like PayPal are involved in almost all areas of our world. The company’s products like Venmo allow people to send money, while Braintree enables companies to process their payments. Honey helps people to save money by identifying coupons.

In Australia, a company like Afterpay is helping people buy now and pay later. Affirm, a company that offers similar products at a larger scale, is said to be going public soon. Robinhood, the giant online brokerage, has also disrupted an entire industry. It is also planning to go public. 

These companies have succeeded in simplifying tasks that were previously difficult and expensive. For example, with PayPal, you don’t need to visit a Western Union shop to send money. You can do it right on your smartphone. 

Investors have rewarded these companies, with PayPal being more valuable than most banks in the United States. Square, which was started a few years ago, is now more valuable than Goldman Sachs.

Quare, PayPal, Shift4Payments

Quare, PayPal, Shift4Payments

Cloud computing

Cloud computing is an industry that solves substantial problems for companies and individuals. At the very basic, the industry helps people and companies store their files and documents in the cloud. 

However, on a large scale, cloud computing is simplifying how they handle their workloads. It also helps deal with other difficult tasks like cybersecurity and data warehousing. The industry also helps firms implement and develop artificial intelligence and machine learning.

As a result, the cloud computing industry has done extremely well in the financial market. For example, Amazon and Microsoft are now valued at more than $2 trillion each because of their cloud solutions. Amazon’s cloud service is known as AWS, while Microsoft’s is known as Azure. Other large players in the industry are Alibaba, Alphabet, and IBM.

There are other niche cloud computing firms. For example, a company like Zoom provides cloud video conferencing services, while Salesforce offers customer relationship management through the cloud. Also, companies like Crowdstrike offer cloud security. The chart below shows the performance of a popular cloud computing ETF and the S&P 500.

SKYY vs. S&P 500

SKYY vs. S&P 500

Clean energy 

The world is in a rapid transition from fossil fuels. In the Paris Climate Accord, many countries pledged to lower their carbon emissions. To do this, they are investing heavily in renewable energy products like solar and wind. As a result, companies that specialize in that are doing relatively well in the financial market. 

For example, in the United States, a company like Tesla is doing well because of its electric vehicle products. But it is also the biggest integrated solar company in the country because of its ownership of Solar City. Other solar companies that are doing extremely well are Sunrun, Canadian Solar, and First Solar. 

At the same time, a company like NextEra has replaced ExxonMobil as the biggest energy company in the world. It has a market cap of more than $158 billion.

The wind is also a big part of clean energy, and wind stocks are also doing well. These include companies like Vestas Wind and Northland Power.

Sunrun, First Solar, Vestas Wind

Sunrun, First Solar, Vestas Wind


Many countries are starting to legalize or talk of legalizing marijuana for medical and even recreational use. In the United States, the House of Representatives managed to pass a bill that would legalize the vice. Many states have also voted to do the same. Subsequently, many companies that produce marijuana products have done well. 

For example, Tilray has a market cap of more than $1.5 billion, while Canopy Growth is valued at $11.2 billion. Tilray recently announced a merger with Aphria, another company that offers these products.

In general, investors believe that the industry is worth billions of dollars and that these companies will do well when it is legalized.

Cronos and Canopy Growth

Cronos and Canopy Growth

Final thoughts

As an investor, investing in sectors that are experiencing growth is the best thing to do. In fact, growth stocks have dominated their value counterparts for years. Therefore, we suggest that you do your research and find quality companies in these sectors and then invest in them. A better approach is where you find quality ETFs that track these companies.

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