The Fastest Growing Industries to Invest in 2021
By Dale Gillham |
Since the start of the COVID-19 pandemic almost 18 months ago, many areas of our lives have changed. There have also been significant changes in regards to industry and how we do business, which has had a direct correlation on the stock market. So, I thought we would investigate the fastest growing industries in 2021 to see what changes are occurring and where opportunities may lie in the future.
IBIS World list the fastest growing industries in Australia
The Research by IBIS World about the 10 fastest growing industries in Australia by revenue growth revealed some quite interesting results. Number one on the list is rice growing, which is up 403 per cent followed by cotton growing up 240 per cent while Telehealth is up 169 per cent.
Of the top 10, 50 per cent are related to primary production or wholesaling of various grains together with cotton. Four of the top 10 are involved in online retail sales with online grocery sales at number 6 up 47 per cent while home furnishing sales is at number 8. Surprisingly, men’s clothing is at number nine and is up 33 per cent, which could imply that until recently men preferred to visit a store rather than buy online. Rounding out the list at number ten is baby products with sales up 29 per cent.
So how does this relate to the Australian stock market?
Almost 50 per cent of the top 10 either grow or sell grains, therefore, companies such as Graincorp may be benefiting from the surge in revenue growth, as might Elders whose agribusiness provides services to the wider farming community. In regards to online shopping for home furnishings, we have listed stocks such as Temple and Webster, Beacon Lighting, Fantastic Furniture together with the big brands like Myer, David Jones and Harvey Norman. When looking at men’s clothing, there are many listed companies that now provide online ordering and I am sure I do not need to remind parents about Baby Bunting, which is also listed on the ASX.
While I am not suggesting that investors should rush out and buy these companies right now, the research is showing that these stocks are benefiting from the changed economic climate. So, while everyone needs to do their own research as to how each company is benefiting and the likely outcome in terms of share price growth, the research does tell us where to start looking.
What were the best and worst performing sectors last week?
The best performing sectors included Information Technology up 13.69 per cent followed by Financials up 3.08 per cent and Consumer Staples up 2.91 per cent. The worst performing sectors included Materials down 1.85 per cent followed by Industrials up 0.65 per cent and Energy up 0.74 per cent.
The best performers in the ASX/S&P top 100 stocks include Afterpay, which is up 36.72 per cent on news of a takeover by US company Square. This is followed by Wisetech up 7.60 per cent while the ASX and Xero were both up 3 per cent. The worst performing stocks included Fortescue Metals down 7.47 per cent followed by Mineral Resources down 6.44 per cent and Oz Minerals down 3.28 per cent.
What's next for the Australian share market?
Last Monday, the Australian stock market rose strongly on the back of the takeover announcement of Afterpay by US payment company Square with the trading range for the day the largest we have seen since the first few weeks of 2021. But as we have seen time and time again, the market failed to push higher with any momentum and was relatively subdued over the remainder of the week. So, while the market is up around 1.8 per cent for the week, nearly all of this gain occurred last Monday.
Right now, the market has confirmed it is bullish and I believe it will continue to push towards 8,000 points. That said, as has been demonstrated many times in the last year or so, the market does have a mind of its own. Therefore, I continue to urge investors to exercise caution and not to chase shadows, as I am seeing many try to profit from stocks that have already made strong gains believing they will achieve a similar return in the future. The truth is that you cannot buy yesterday’s returns, so make sure you invest wisely for tomorrows returns.
For now, good luck and good trading.
Dale Gillham is Chief Analyst at Wealth Within and international bestselling author of How to Beat the Managed Funds by 20%. He is also author of the award winning book Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in all good book stores and online.