Contrarian investing isn’t for the weak, but analysts at Canaccord Genuity (TSX:CF, LSE:CF) have handpicked some overlooked sectors that might be worth a look.
“Every year, we introduce three contrarian investments, looking for sectors that have been shunned by investors over the past few years, but where we think industry fundamentals are past their worst point,” analysts wrote in a note.
So what’s worth a look in 2023? For Canaccord, those sectors are Canadian materials, US airlines and US medical equipment makers.
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First up: basic materials. According to the brokerage, the sector provides “offensive and defensive characteristics” thanks to a nearly 50/50 exposure to cyclical commodities and gold.
“This characteristic hedges our recession view, should we be wrong,” analysts noted.
As for US airlines, pricing power on domestic international routes remain strong, Canaccord noted, while pandemic lockdown fatigue, sustained spending on experiences (rather than on goods) and weak euro are expected to support traffic and keep load factors elevated, despite a projected manufacturing downturn.
Finally, US medical equipment makers should benefit from the reopening of hospitals and clinics for elective surgeries and medical checkups, according to Canaccord.
“Also, subpar capex by health care providers through the pandemic should help fill order books and allow for additional price hikes in 2023,” the analysts wrote.
Contact Angela at angela@proactiveinvestors.com
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