Best Industries to Invest in 2012

Investments made in the booming sectors of the economy always help in earning a lot of money. However, one must be able to distinguish the booming sectors from those sectors which have some execution problems, to invest in the right stocks. In my opinion, the best industries to invest in, right now would be pharmaceuticals, banking and financial services, information technology, retail and power.

Pharmaceutical Industry
This is definitely one of the best industries to invest because of its recession-proof nature. Recession-proof businesses are those who do not experience a drop in demand even in a situation where the economic growth has reduced considerably. You can think of investing in a large cap pharma companies which have a complete product mix and have manufacturing facilities at multiple locations. Major pharma companies having orders from across the globe and a strong research and development (R&D) activity would be the preferred bets in the pharma sector. According to many investment analysts, pharma companies can give a stunning return of anything between 14-30% this year.

Banking and Financial Services
For all those wishing to know what is the best industry to invest in, the answer would be banking and finance industry. This industry recovered the best after the economic recession and hence banking stocks should be a part of your core portfolio. Choose banking and finance companies having wide range of products and a strong balance sheet to see a great appreciation in the stock price. Return from banking stocks can be in the range of 14-23% this year.

Information Technology
Information technology firms are the biggest beneficiary of the computer revolution and increased demand for software services from all sectors of the economy. With availability of trained and talented manpower, good infrastructure and able leadership, software companies would be able to clock good growth figures with rising demand. Profits are expected to improve quarter after quarter, thus creating a ray of hope for investors interested in the IT field. Top stocks in the software industry can give you a return of 13-20% in 2012.

Retail
Retail would also figure in the list of the best industries to invest in 2012. This industry gets the direct benefit of an improved US job market as consumer spending increases. You should opt for the debt free and large retail chains which have an established brand in the market. The common view is that retailing will be a big industry and the one to watch out for in the years to come. Top companies in the retail sector are available at fairly good valuations and can give a return of 12-18% to investors.

Power
The developed countries have always been one of the biggest consumers of resources available on this planet. In a rough estimate, it can be said that the USA consumes almost one-quarter of the world's energy production. The past decade however, witnessed an upsurge in the energy consumption of the developing countries like China and India. So, we can observe that power consumption is increasing every day due to fast development activities especially in developing countries. With the fossil fuel supplies dwindling all across the world, energy crisis is inevitable, and that is the reason why countries are aggressively focusing on other forms of energy sources instead of just relying on fossil fuels.

The development of power sector in the economy of a nation has a direct influence on its growth as energy is the fundamental requirement for propelling robust growth. Power producers, as a result of this, have a great chance to increase their sales figures. Being a capital intensive business, investors in power distribution and transmission sectors will need to have patience to get good returns. Stock prices will move in the upward direction only when the net profits surge. You can expect a return of 8-15% from major power stocks making them one of the good companies to invest in 2012.

So, this was all about the best industries to invest in 2012. An ideal portfolio can have stocks of top companies belonging to above mentioned industries. This will help you in averaging out your risk and improve returns. The key for success in equity markets is to improve your research abilities and seize the opportunities which come your way. Think over it and take the right decision. Good luck!

DISCLAIMER: This article is just for reference purposes and does not recommend any stock market transactions.