In 2016 according to Factset almost all U.S. sectors, except transportation will see increase in profitability.
Health technology is projected to be the most profitable sector in 2016 again with a 21.6% net profit margin. With 17.2% net margin, technology services will edge out finance (17.1%) to take the second place. Interestingly, the Federal Reserve’s first interest rate hike since 2006 did not cause any significant changes to the earnings estimates for companies in the finance sector in 2016. Electronic technology and consumer non-durables still trail at fourth and fifth place.
What is interesting is that both energy minerals and non-energy minerals are projected to rebound from a disastrous 2015 when they ranked last among all sectors. Factset estimates that net margin for energy minerals will rise to 3.9% from a mere 0.2% in 2015, while non-energy minerals will surge to 4.7% next year, a significant jump from net loss of 2.1% in 2015. Very nice considering the plunge of energy and commodities prices in the last year.
Even if we go deeper within the more granular categories within the broad sectors listed above, healthcare, tech and finance still stand out. Biotech, generic and major pharmaceutical companies rank among top 10 – same with major banks and investment managers. The only specific industry category on top 10 outside of the 3 most profitable sectors is tobacco, with 27% net margin projected for 2016.
Most profitable industries according to Factset: