One Sector to Soar… And Two Sectors to Crash

by Andrew Zatlin August 09, 2022 1:00 pm ET

I just got my hands on some powerful data.

It’s telling me to avoid two investment sectors…

And to put my chips into a sector that’s ready to deliver profits.

Let me show you what I mean.

For a transcript of this video, see below. This transcript has been lightly edited for length and clarity.

One Sector to Soar… And Two Sectors to Crash

There’s a simple reason I track hiring data:

If a company expects to grow, it’s going to hire more staff. And if it expects to shrink, it’s going to stop hiring.

This data can help us identify which companies or sectors to invest in, and which ones to avoid.

In fact, the current data paints a clear picture:

There are two huge sectors you need to avoid…

And there’s one you need to dive into now.

These Two Sectors Have Fallen off a Cliff

Let’s start with the two sectors to avoid.

The first one encompasses several major companies that have stopped hiring.

For example, Amazon’s (Nasdaq: AMZN) hiring exploded last year. But in 2022, it’s fallen off a cliff like Wile E. Coyote:

Facebook’s (Nasdaq: META) hiring has cratered, too:

So has hiring for Alphabet — otherwise known as Google — (Nasdaq: GOOGL):

And Microsoft (Nasdaq: MSFT):

What do these four companies have in common?

A Dismal Forecast for Cloud-Computing

Simple. They’re all part of the cloud-computing sector. In other words, they’re involved in the storage and processing of data over the internet.

During Covid, people were stuck indoors, and spent a lot of time on the internet. That meant huge growth for this sector.

But now people have returned to normal. That’s why the cloud-computing sector is full of companies I call “Covid casualties.”

And that includes companies that manufacture components for this sector — companies like Intel (Nasdaq: INTC):

And Oracle (NYSE: ORCL):

So, bottom line: stay away from cloud-computing companies!

Meanwhile…

Hiring Is Down in This Sector, Too

The stock market’s been down most of this year. And trading volumes have been down, too.

As a result, trading houses have scaled back hiring significantly. Take a look at TD Ameritrade (Nasdaq: AMTD):

Goldman Sachs (NYSE: GS):

And Charles Schwab (NYSE: SCHW):

The success of these companies is largely dependent on trading volume. That explains why hiring in some cases is at two-year lows.

Bottom line: Just like cloud-computing, stay away from this sector!

As for the sector I’m bullish on…

The Impact of a Strong Defense

Take a look at hiring for a company called Precision Castparts. This company isn’t publicly traded anymore, but I still track its hiring:

Precision Castparts manufactures titanium components for advanced, cutting-edge aircraft. And as you can see by the arrows, hiring has taken flight this year.

L3Harris (NYSE: LHX) is another company in the midst of a hiring boom. L3 makes communications equipment for aircraft and military-related customers:

Northrup Grumman (NYSE: NOC), a similar business, has increased its hiring, too:

Notice the common theme here? All these companies are in the military/defense sector. Right now, their hiring is exploding. That’s because business is great now, and they expect it will keep being great into the future.

You see, much of the world — Europe, Asia, the Middle East — is ready to spend billions on defense. But after seeing how Russian-made equipment performed (or didn’t perform) on the battlefield against Ukraine, nobody’s buying its defense equipment anymore.

Clearly, the defense sector is ready to run.

But one company above all the rest has enormous profit potential.

I’m sharing the details about it below with all my “Pro” subscribers, so give it a look!

We’re in it to win it. Zatlin out.