The stock market is made up of many sectors. Most investors focus on whatever sector is hot right now. For nearly two years, that’s been tech thanks to the rollout of AI. But tech returns have slowed in recent quarters. Other sectors are starting to show stronger returns.
Investors who shift more towards these other sectors can buy into a more reasonable value right now. And they can also get a higher income than in tech plays.
Either way, that can help investors through a tough time, whether the economy sinks into a recession next year or not.
One top play is the utility sector. There’s rising demand for power, especially thanks to the rollout of AI technologies and their growing power demand. This sector is now performing even better than tech stocks.
Investors can simply stick with their local utility or with a sector-based ETF like the Utilities Select SPDR Fund (XLU). This low-cost fund owns a basket of utility ETFs, which should continue to rally higher as interest rates trend lower.
Action to take: Investors may like XLU shares around $75.00. At that price, the ETF pays a 3% dividend, higher than the market average.
For traders, with shares trending higher, an option trade like the December $80 calls could deliver even better returns than buying and holding shares. The December $80 calls last traded for about $4.10.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.