Top 5 Sectors to Watch in a Bullish Market

Do you want growth in a bull market? These aren’t just the sectors to watch but the stocks that should go right along with them.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors are starting to see some positivity once again in this market, which could influence a bull market in the very near future. With that in mind, here are five sectors that should do well in a bull market and stocks to go right along with them.

Created with Highcharts 11.4.3Constellation Software + Walt Disney + Bausch Health Companies + Enbridge + Canadian Imperial Bank Of Commerce PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

1. Technology

The technology sector continues to be a major driver of growth, primarily due to advancements in artificial intelligence, cybersecurity, and software development. Companies like Shopify and Constellation Software (TSX:CSU) are well-positioned to capitalize on these trends. The sector’s robust growth potential is supported by ongoing digital transformation across various industries.

Yet, of these two stocks, I would go with CSU stock. CSU stock has shown consistent revenue growth, with revenue reaching US$8.84 billion as of March 2024. This reflects a 24.35% year-over-year growth. Analysts have a positive outlook with price targets ranging from $3,400 to $4,300, suggesting potential upside.

The company continues its strategy of acquiring smaller software firms. This enhances its diversified product portfolio and reduces dependency on a single market. This acquisition-driven growth strategy has been a key factor in its financial performance and investor confidence

2. Healthcare

The healthcare sector should experience significant earnings growth in 2024. After a challenging year in 2023 due to COVID-related impacts and patent cliffs, the sector is poised for a rebound. Key players like Eli Lilly and AbbVie are anticipated to show strong earnings performance. This is driven by innovation and increased healthcare demand.

However, if you’re looking for a Canadian stock, consider Bausch Health Companies (TSX:BHC). BHC stock should benefit from a recovering healthcare sector post-pandemic, with an emphasis on expanding its product portfolio and improving operational efficiencies. The healthcare sector is experiencing a resurgence, and Bausch Health’s efforts in product diversification and innovation position it well to capitalize on this trend.

3. Financials

The financial sector is viewed as a contrarian play with significant upside potential. Despite concerns about interest rates and economic uncertainty, financial institutions such as banks and insurance companies are expected to benefit from economic normalization. This sector includes major banks like Royal Bank of Canada and Toronto-Dominion Bank, which have historically shown resilience and growth during market recoveries.

But for dividends and growth, I would go with Canadian Imperial Bank of Commerce (TSX:CM) instead. CIBC stock is known for its strong dividend yield, with a forward dividend yield of 6.32%. The bank has maintained a conservative approach, ensuring stable payout ratios and consistent dividend growth. Analysts expect CIBC to benefit from economic normalization and higher interest rates. Furthermore, CIBC’s strategic focus on digital transformation and operational efficiency will help it maintain a competitive edge in the financial sector

4. Energy

The energy sector, particularly Canadian oil and gas companies, should perform well due to new infrastructure projects like the Trans Mountain Pipeline expansion and the Coastal GasLink project. These projects are set to increase capacity and support stable revenue streams. Companies like Suncor and Canadian Natural Resources are expected to benefit from these developments despite the challenging macroeconomic environment for energy.

Yet I would instead go with Enbridge (TSX:ENB). Enbridge’s strong dividend yield of approximately 7.69% and ongoing projects like the Trans Mountain Pipeline expansion should enhance its capacity and revenue streams. The energy sector, particularly oil and gas, is poised for growth due to increasing demand and strategic infrastructure investments. 

5. Communications Services

The communications services sector is poised for continued growth, driven by major players like Meta and Alphabet. The sector’s growth is supported by increasing digital ad spending and advancements in communication technologies. Additionally, companies like Disney (NYSE:DIS), AT&T, and T-Mobile US are expected to contribute to the sector’s strong performance through improved earnings and expanded service offerings.

Now, for an American player, I would go with Disney stock. Disney has been focusing on expanding its streaming services and content offerings. Despite challenges, the company’s investments in Disney+ and other digital platforms are expected to drive significant revenue growth. Analysts remain optimistic about Disney’s ability to capitalize on its strong brand and diversified entertainment portfolio.

Should you invest $1,000 in Ballard Power Systems Inc. right now?

Before you buy stock in Ballard Power Systems Inc., consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Ballard Power Systems Inc. wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Fool contributor Amy Legate-Wolfe has positions in Canadian Imperial Bank Of Commerce, Royal Bank Of Canada, Shopify, and Toronto-Dominion Bank. The Motley Fool has positions in and recommends Shopify. The Motley Fool recommends Alphabet, Canadian Natural Resources, Constellation Software, Enbridge, Meta Platforms, and Walt Disney. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Stocks for Beginners

A train passes Morant's curve in Banff National Park in the Canadian Rockies.
Dividend Stocks

1 Practically Perfect Canadian Stock Down 24% to Buy Now and Hold for Life!

CNR stock is a top Canadian stock for investors, especially with shares down on the TSX today.

Read more »

Canada national flag waving in wind on clear day
Dividend Stocks

The Best Canadian Stocks to Buy Right Away With $30,000

If you have $30,000 you're willing to invest, these are some of the first Canadian stocks to consider on your…

Read more »

rail train
Dividend Stocks

What to Know About Canadian Pacific Railway Stock for 2025

CP stock has now gone through a major merger, so what do investors have to look forward to?

Read more »

Paper Canadian currency of various denominations
Stocks for Beginners

2 Canadian Value Stocks for 2025

There's a fair bit to consider when looking at value stocks, so let's look at two that fit the bill.

Read more »

data analyze research
Stocks for Beginners

Smart Money’s Playbook for the Current Market Dip

This market dip might be worrying investors, so don't worry with these two stocks.

Read more »

Canada day banner background design of flag
Tech Stocks

The Top Canadian Stock to Buy With $5,000 in 2025

There are few Canadian stocks out there that offer the outlook of this tech stock, bound for more growth.

Read more »

Cannabis business and marijuana industry concept as the shadow of a dollar sign on a group of leaves
Stocks for Beginners

Buy the Dip Before It’s Too Late: This Canadian Stock Won’t Stay Cheap Forever

Investors might think that cannabis stocks are out, but this one could be the top Canadian stock to consider.

Read more »

a person watches a downward arrow crash through the floor
Dividend Stocks

Is This Correction Your Chance? Top 4 Canadian Dividend Stocks on Sale

Stocks may be down, but now is your chance to get some of these top dividend stocks on sale.

Read more »