Want to learn how to choose US stocks? First learn about the 11 major industry categories from GICS!

Many novice investors do not know how to buy U.S. stocks or where to start. With so many U.S. stock holdings, how should they choose? Books and online articles all recommend choosing from the four major categories of “food”, “clothing”, “housing” and “transportation”. Are there no other more professional and detailed selection criteria? In fact, this problem can be solved by looking at the GICS (Global Industry Classification Standard) developed by Standard & Poor’s (S&P) and Morgan Stanley (MSCI) to understand more detailed industry categories, which will help you choose the investment target that suits you. Want to learn how to choose US stocks? First learn about the 11 major industry categories from GICS!

You must know what GICS is when investing in US stocks

Standard & Poor’s (S&P) and Morgan Stanley (MSCI) launched the Global Industry Classification Standard (GICS) in 1991 , which divides the industry system into 4 sectors, 11 industry sectors, 24 industry combinations, 69 industries and 158 sub-industries. This standard will continue to be revised in response to industrial changes in the world and make adjustments that best suit the changes of the times.

Why can understanding GICS help investors understand how to buy US stocks?

Investors who don’t know how to buy U.S. stocks usually don’t know what targets they can invest in. There are thousands of companies listed in the United States, and it is actually quite difficult for investors to choose a company from them. Therefore, starting from the industry that you are interested in or familiar with can lower the threshold for buying U.S. stocks. The following will take you to understand what the 11 major industry sectors are? And take you to understand what companies are in the industry sector. In addition, the companies mentioned in this article are not investment advice, but only for industry introduction.

Global Industry Classification Standard (GICS) 11 major industries

Consumer Staples Industry

The industry is relatively mature, and its revenue growth does not fluctuate greatly like the IT industry. It is a stable growth industry. Under the industry sector, there are three major industry groups: Necessities sales channels, including food distribution, pharmacies, convenience stores, supermarkets or hypermarkets. Personal and household products, including the production of household products and personal hygiene products, such as bath products and beauty care. Food, beverages, tobacco, including (non) alcoholic beverages, processed meats, cigarettes and agricultural products. Necessary consumer goods US stocks such as: Procter & Gamble, Coca-Cola, PepsiCo, Johnson & Johnson

Consumer Discretionary Industry

Since it is a non-essential product, the company’s profitability will vary depending on the business cycle. When the economy is not good, it is easier to observe whether the company has anti-fragility and whether it is worth investing in. The industry sector includes the following four major industry groups: Automobiles and auto parts, including auto parts manufacturers, tire manufacturers, automobile manufacturers and electric bicycle manufacturers. Durable consumer goods and clothing, including manufacturers of durable electronic products, furniture, home appliances, shoes and clothing. Consumer services, including operators of resort hotels, cruise ships, amusement parks, casinos and restaurants. Retail industry, including dealers, online retail, department stores and professional retail. Non-essential consumer goods US stock holdings include: Amazon.com, Inc., Home Depot, Inc., McDonald’s Corporation, Nike, Inc, Starbucks Corporation

Energy Industry

The upstream, midstream and downstream of the energy industry are affected differently. The mining industry belongs to the upstream and is very susceptible to stock price fluctuations due to international situations and political factors. The midstream oil transportation industry performs relatively steadily and is usually regulated by the government. The downstream refining industry or gas stations are also more susceptible to fluctuations due to economic factors than the midstream. Under the industry sector, it is subdivided into two major industries: Oil and gas equipment services, companies with equipment for mining natural energy (natural gas and oil). Oil, natural gas and consumer fuels, including the exploration, production, refining, storage, transportation and sales of natural gas and oil. Energy US stock holdings include: Exxon Mobil, Chevron, ConocoPhillips, Schlumberger

Raw materials industry

Market supply and demand will affect the price of commodities in this industry. Once there is a large demand in the market, the price will rise due to material shortages, and the price will gradually fall after mass production. This cycle will continue, so this type of stock belongs to cyclical stocks. Under the industry sector, it is subdivided into 5 major industries: Chemical manufacturing industry, including the production of chemical raw materials, fertilizers, pesticides, industrial gas manufacturing and coatings. Building materials industry, including materials such as sand, gypsum or lime required for building houses. Container and packaging industry, including businesses that manufacture paper packaging, cartons and plastics. Metals and mining, companies that mine various metals, such as copper, gold or silver. Paper and forestry industry, companies that make paper and wood products. Raw materials US stock holdings such as: BHP Billiton, Rio Tinto, Vale

Industrials

The industry is mainly a B2B industry, which basically provides products to other enterprises and companies rather than the general public. Although it may face the crisis of business cycle, its revenue is still quite stable. Under the industry sector, there are 3 major industry groups: Land, sea and air transportation, which provide shipping, air transportation, rail and land transportation service companies. Business and professional services, which provide commercial printing, environmental equipment and trading services. Capital goods, aerospace equipment, agricultural and industrial equipment companies. Industrial US stock holdings include: Deere & Company, Caterpillar, Illinois Tool Works

Healthcare Industry

New drugs, vaccine development, medical insurance and medical equipment are all in this industry, which is less affected by economic fluctuations. Under the industry sector, there are two major industry groups: Healthcare services and equipment, including hospitals, nursing homes, suppliers of medical instruments, diagnostic equipment and hospital supplies. Pharmaceuticals, biotechnology, life sciences, drug research, medical consumables and genetic analysis suppliers. US healthcare stocks include: UnitedHealth Group, Eli Lilly and AbbVie

Financials Industry

The financial industry includes companies such as securities, futures, insurance and banks. This industry is usually supervised by the government, so the risk of bankruptcy is relatively low. Financial stocks are liked by many people, but because they are regulated by the government and need to comply with regulations, it is more difficult to issue special products and may miss new business opportunities. Under the industry sector, there are three major industry groups: Banks, which are generally related to mortgage loans and small and medium-sized enterprise loans. Insurance diversified financial services, banks that provide credit cards, securities and financial derivatives. Financial US stock depository targets such as: Berkshire Hathaway, JPMorgan Chase & Co., Bank of America

Information Technology Industry

Companies that provide software, hardware and semiconductor services are all in this industry. The information technology industry has a more diverse selection of options, and stock prices are prone to high volatility. Under the industry sector, there are three major industry groups: Software services, including suppliers of application software, system software and office automation. Computer hardware equipment, providing suppliers of wifi machines, computers and mobile phones. Semiconductor products and equipment Information technology US stock holdings such as: Apple, Microsoft, Dell

Communication Services Industry

Companies that provide television, telephone, Internet and online streaming video services are all in this industry. People rely heavily on this industry to obtain new knowledge, but the market in developed countries is gradually saturated and competitive. Under the industry sector, there are two major industry groups: Telecommunications services, which provide broadband, cable, wireless and Internet services. Media and entertainment, which provide advertising, cable and unlimited television and social platforms. Telecommunications service US stocks include: Meta Platforms Inc., The Walt Disney Company, T-Mobile US Inc.

Utilities Industry

Suppliers of equipment that people need for their daily lives are included, such as: water pipe laying, electricity distribution, distribution and transportation of natural gas, renewable energy and other manufacturers. The dividends of this industry are usually relatively stable, but because of government regulation, it is difficult to have high profits, so it is not easy to increase dividends. Public utility US stock holdings include: NextEra Energy, Duke Energy, Dominion Energy

Real Estate

Homes, commercial land, factories and public land construction all belong to this type. Investors will buy this type of stocks to fight inflation, but the stock price will also fluctuate violently. Under the industry sector, it is divided into two major industries: Real estate investment trust funds, companies that provide acquisition and development related to self-occupied, commercial, industrial and medical housing. Real estate management and development, companies that provide development, sales, leasing, management and valuation. Real estate US stock depository sites such as: Host Hotels & Resorts, Regency Centers, CorEnergy Infrastructure Trust

Do you have any other suggestions for investing in U.S. stocks?

It is recommended that all investors should not listen to rumors when investing in individual stocks, and should establish their own screening criteria. The market is full of various gurus teaching investment, and we should be extra cautious, otherwise the hard-earned money may be wasted. If you want to know more about how to buy US stocks and other investment tools, you can read more articles in the finance base to build your own investment capabilities.