This past year will be forgettable for those investors who stayed loyal to the metals: gold, silver, and copper.
Gold lost its luster with very little as far as global inflation, no major uprising in the Middle East, and the stock market delivering impressive returns. At this juncture, despite gold’s recent bounce to the $1,240-an-ounce range, I continue to advise looking elsewhere at this time, as I doubt gains will be sustainable. Traders could buy on weakness down to $1,200 and sell on rallies towards $1,240. That’s the only way you’re going to make money in gold at this time. (Read “Should Investors Hold Out for $1,300-an-Ounce Gold Before Investing?”)
Silver followed gold lower, but could rally should the economic renewal continue to pick up steam. Trade silver if you feel the global economy is recovering. The same goes for copper.
In contrast, the big winner in the stock market this year was the solar sector, which surged about 164%, according to data from Barchart.com. Yet while the gains have been impressive, you don’t want to be chasing the gains higher, due to the extreme volatility of solar stocks in the stock market at this time.
If you are looking for solar opportunities in the stock market, stick with companies in the United States and Canada. The “Best of Breed” in this sector is probably large-cap First Solar, Inc. (NASDAQ/FSLR), a developer of solar hardware that converts the sun’s rays into electricity. But if you are searching for smaller companies, consider checking out SunPower Corporation (NASDAQ/SPWR) on the mid-cap side and Canadian Solar Inc. (NASDAQ/CSIQ) on the small-cap front. A word of caution on this stock market: be really careful with some of the smaller China-based solar plays, as they are subject to extreme volatility and risk.
Two other areas that afforded some excellent returns in the stock market are the insurance and financial stocks, which rebounded from near-oblivion in 2008 to become much better companies now. And as the economy continues to strengthen, I expect the banks to reap the benefits.
Of course, the technology sector continues to provide some exceptional trading opportunities in the stock market. Areas that I like are mobile, wireless, and Internet-related businesses.
Social media stocks, despite the market hype, have delivered amazing returns to investors, along with online discount retailers. The top momentum players in this group are Facebook, Inc. (NASDAQ/FB) and Groupon, Inc. (NASDAQ/GRPN). In U.S.-listed Chinese stocks, some interesting plays include Renren Inc. (NASDAQ/RENN) and E-Commerce China Dangdang Inc. (NASDAQ/DANG).
In the online travel area, priceline.com Incorporated (NASDAQ/PCLN) is the “Best of Breed,” but for a smaller play, take a look at Travelzoo Inc. (NASDAQ/TZOO) or Expedia, Inc. (NASDAQ/EXPE).
Aerospace was also strong this year in the stock market, ranging from the plane builders to the suppliers of parts and services. Two of my favorites in this area are B/E Aerospace, Inc. (NASDAQ/BEAV), a supplier of seat and lighting accessories for planes, and Spirit AeroSystems Holdings, Inc. (NYSE/SPR), a maker of fuselage, propulsion, and wing systems.
As we move into 2014, I favor the banks, Internet, mobility, and technology areas at this time, and I expect potentially more gains ahead in the stock market.