As we approach the mid-point of the year, U.S. stocks continue to fare well with the annualized return of the Dow at 42% and the S&P 500 at 39%. While I have long been skeptical of the idea of stocks continuing at their current pace, you never know, as trading can be irrational, based on my stock analysis. Just think back to late 1999 and early 2000, prior to the technology implosion.
As my stock analysis suggests, you know things may be irrational when the Nikkei 225 in Japan is up over 70% during the last six months prior to a more than seven-percent correction on May 23 and 3.2% on May 27.
Japanese stocks could further correct, as I’m not convinced the economy in Japan is guaranteed to grow consistently, despite the steady injection of easy money, based on my stock analysis. (Read “Japan Not Home-Free Despite Strong GDP.”)
A closer look at some of the sector performances so far this year shows gold and silver mining investments are faring the worst, with the gold mining sector down nearly 33% this year and its silver counterpart down a whopping 38%, according to data from Barchart.com. At this time, based on my stock analysis, I’m still not that anxious to play a bounce in gold and silver, as there are opportunities for making much better returns elsewhere.
The top-performing sector so far this year is the solar energy sector, which is up a staggering 89.7%, according to my stock analysis. And while the advance has been impressive, be aware that this sector is high-risk as far as volatility and that it is largely driven by momentum trading, as my stock analysis indicates. Some of the top players in the solar area include large-cap First Solar, Inc. (NASDAQ/FSLR), a developer of solar hardware that converts solar power from the sun into electricity. Of the mid-caps, there’s SunPower Corporation (NASDAQ/SPWR), and on the small-cap end, take a look at Canadian Solar Inc. (NASDAQ/CSIQ).
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Insurance and financial stocks have also provided some excellent leadership this year, according to mystock analysis. The big banks are delivering and providing great returns to shareholders, and I expect this to continue-especially as they become able to pay dividends again, according to my stock analysis. The insurance sector, comprising those multi-line offerings, is up 48% this year.
I also continue to favor the technology sector, especially those stocks with a focus on mobility and the Internet. The Internet services sector is up 35% this year. Here we have online travel operators, such as Travelzoo Inc. (NASDAQ/TZOO) and Expedia, Inc. (NASDAQ/EXPE). In the social media space in China, take a look at Renren Inc. (NASDAQ/RENN), and in the Chinese e-commerce space, take a look at E-Commerce China Dangdang Inc. (NASDAQ/DANG).
Another sector that is doing well is the aerospace parts and services provider sector, which is up 31% this year, based on my stock analysis. Here you will find interesting companies, including two of my favorites: B/E Aerospace, Inc. (NASDAQ/BEAV), a supplier of seat and lighting accessories for planes, and Spirit AeroSystems Holdings, Inc. (NYSE/SPR), a maker of fuselage, propulsion, and wing systems.
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On the small-cap end, consider taking a look at Astronics Corporation (NASDAQ/ATRO). And finally, for speculative investors, micro-cap CPI Aerostructures, Inc. (NYSE/CVU) is worth a look.