Most Promising Industries

Gutfreund_'s picture
Rank: Gorilla | banana points 502

Over 2017 and into 2018 we've seen a lot of larger deals announced in the TMT, Healthcare, and Consumer Retail industries, along with many sponsor deals. I'd like to know what sectors you guys think will be most promising and deal-flow heavy over the next 3-5 years?

Comments (59)

Feb 3, 2018

Infra looks promising imo

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Feb 4, 2018
Feb 4, 2018

A lot of the big private equity firms have recently raised massive funds for infrastructure. Infrastructure is also one of the top priorities for the Trump administration. I do not work in the sector, but I can certainly see it being busy in the future.

Feb 8, 2018

The PE attraction to infrastructure plus little to no innovation in construction in forever make me think that it will be a promising industry as well.

One example that I found interesting: https://spectrum.ieee.org/automaton/robotics/indus...

Feb 15, 2018

Why would little to no innovation in a sector make it more promising?

Feb 17, 2018

Because you want to front-run sector growth.

Feb 13, 2018

His new $1.5T plan has to have infrastructure investors watering at the mouth....

Feb 8, 2018
Feb 4, 2018

Unless we get into another recession in the next 3-5 years, TMT specifically tech will continue to dominate.

With the huge new changes in the Healthcare space (Amazon, JPM, and Berkshire Hathaway's attempts to change Healthcare and political changes to Healthcare), I would think there would be a lot of deal activity in this space, either through consolidation, bankruptcies, or lots of M&A activity.

Feb 4, 2018

I agree on Healthcare. With TMT, are most deals happening IPOs/financings, or M&A ?

I think the PE shops are going to be spending a ton if valuations come down as they have to put that dry powder to good use. Typically these aren't investments in Tech companies, but I imagine Tech companies will try to sell while they can get ridiculous premiums at the top of the market.

Curious of what others think.

Feb 4, 2018

Most tech deals are IPOs/financings from what I've heard and read. I've heard M&A activity and overall growth of banking in tech will be hindered in the coming years with certain companies bypassing banks (like Spotify).

Feb 17, 2018

Am I asking my question in the wrong sections?

Feb 17, 2018

It's about doing what you enjoy. First, do your research of the different areas of finance: IB, HF, PE, PWM, S&T and all the other areas that exist. With that general knowledge think about what the hell you enjoy. Next, pick a path and stick to it until an opportunity presents itself or you get an idea you feel confident in pursuing. Honestly, there is no answer to your question. I am on the IB route because I think it provides me with the most options based on what my interests are. Now get to researching and stop asking open-ended questions. Good luck.

Feb 8, 2018

Maybe we'll see innovation in payments, cybersecurity related to fig, and small business lending

Feb 17, 2018

I mean, the general consensus on this site is that IB is the best foundation and transferrable set of skills, S&T is rather specialized (but still can be a great career), while ops is useless for all intents and purposes (again, according to this website).

Feb 17, 2018

That was the idea I was getting as well

Feb 17, 2018

According to WSO IB has the most 'transferable skills', but, what skills? Modelling etc.? Don't forget that the softer skills are also developed in S&T,ops,risk and so on. Communication, analytical thinking, team work to name a few are directly transferable in any industry, would say you build these soft skills in most roles.

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Best Response
Feb 4, 2018

TMT.

Data consumption is growing exponentially. We need fiber/data centers/towers/satellite infrastructure. They are intertwined and competing at the same time. Telecom infra has been and will continue to be hot, especially if you think globally.

Telecom providers will also stay active. At the wireless level, you have 5G coming, which will enable wireless providers (e.g. Verizon) extemely good positions to capitalize on that. They are/could be the IoT providers (seee Verizon acquisition of Fleetmatics etc). They are/could be content providers (i.e. AT&T/Time Warner) /internet providers (i.e. Verizon Fios or in the future, fixed wireless 5G). They continue to focus on video streaming and also poised to replace cable internet. Now, cable operators have this 5G threat. Do they buy wirelesss? Do they become the 5G backbone (i.e. partner with wireless so they can leverage cable infrastructure)? They have had a lot of success getting into broadband internet and replacing wireline guys (i.e. Comcast providing home internet). Separately, they have video businesses (cable tv). People continue to cut cord...how do you position yourself? Do you focus on your network/content that OTT tv providers (i.e. sling) have to pay for? Or do you introduce your own OTT (i.e. Disney is coming out with a product to compete against Hulu/Netflix)? Cable operators could horizontally merge to gain scale or vertically to snap up network/content to hedge against OTT.

Did I mention wireline companies? They are kind of fucked. They are losing voice (home phone) and building out fiber to provide fiber based products. But when 5G comes, this whole universe of regional wireline companies could get fucked, especially if those 5G providers are competing with bundles (i.e. your subscription has both Home internet and also phone service). The wireline fiber infrastructure will have value, but I'm not so convinced that their services/products will continue to grow in a 5G universe (which is a bit away I guess).

And now you have tech companies. Internet/cloud is everything and the new norm. Telecom infrastructure is becoming more and more cloud based...tech companies will benefit from by being the enablers (i.e. security provider for cloud). Tech companies enable OTT that compete against traditional media (i.e. BAMTECH or Netflix, who isn't just tech but also create original content).

And there are the giants (i.e. Amazon, Facebook). They already touch on so many daily facets of our lives. They will continue to expand in other areas where consumers spend money on. And they have so much shit that they can literally enter anything they want...they also have capital...it's a matter of what's the most sustainable/attractive opportunity to focus on at the moment.

I kind of rambled. But I think TMT is really cool. Also obviously TMT touches all...consumer/FIG/HC. Application of 3D printers for healthcare/ blockchain for FIG / Amazon is dominating consumer. Everything is so intertwined these days...and I think TMT is at the core of it.

Feb 4, 2018

Thanks for posting your thoughts. I agree with a lot of this, especially on the TMT fact that TMT is having an impact on all areas from Healthcare to Consumer, etc. My question is about the Media & Telecom part of TMT, I don't know much about these but from my perception it seems that 4-6 players dominate the space. In Telecom especially, there is a lot of regulation and AT&T/Time Warner hasn't even passed approval yet, which I think will pave the way for more deals in the future [if passed]. But this is an area with high barriers to entry with many long established players, so do you see deals happening at the lower end of the spectrum, or mainly large mega-deals?

Feb 5, 2018

Mostly large cap deals. It's all about scale and innovation. Scale to be the biggest distribution network (cable operators), the biggest network (tc networks) (content is expensive than ever...you need a big platform that can monetize content everywhere and every avenue). Then you need scale to rationalize cost to compete against tech. There will be smaller deals (Data centers/satellites etc.) but they trade at rich multiples. All these will be in billions if not tens.

Feb 5, 2018

Mostly large cap deals. It's all about scale and innovation. Scale to be the biggest distribution network (cable operators), the biggest network (tc networks) (content is expensive than ever...you need a big platform that can monetize content everywhere and every avenue). Then you need scale to rationalize cost to compete against tech. There will be smaller deals (Data centers/satellites etc.) but they trade at rich multiples. All these will be in billions if not tens.

Feb 6, 2018
UENYC:

TMT.

Data consumption is growing exponentially. We need fiber/data centers/towers/satellite infrastructure. They are intertwined and competing at the same time. Telecom infra has been and will continue to be hot, especially if you think globally.

THIS. People do not realize how much money needs to be spent at such a large scale to enable all the cool applications like 4k TV on your phone and automatic cars to operate on a wireless national network. Couldn't agree more with @UENYC, it is all interconnected and Trump's government is now trying to get involved in the deployment of 5G which should mean even more cash injected in the industry. Future looks bright for TMT

Feb 17, 2018

Healthcare and Tech will always be strong.

Feb 8, 2018

I'm very biased but whatever, I agree - tech is just innovating at a rate far higher than anything else in the world ever before, and that rate is only increasing exponentially creating value (real value, not banker "value").

Feb 17, 2018

1&2) Tech

3) Aside from the fact that I'm obviously interested in it, Tech has the best pay due to the fact that there is/will be more deal flow going forward, and should you decide to venture into CorpDev, your comp would be as close to IBD as it gets in industry.

Calling Ron Paul an isolationist is like calling your neighbor a hermit because he doesn't come over to your property and break your windows.

Feb 13, 2018
Feb 15, 2018

You mean Confidential Info Memo right? Not the other CIM?

Feb 17, 2018

Good memories either way

Feb 17, 2018

^^ Natural Resouces

Feb 17, 2018

Natural Resources / FIG / Infrastructure will always be stable...

Feb 17, 2018

FIG is where it's @

Feb 17, 2018

Not saying it's better than any of the industries listed, but something to think about...

I think budget cuts are going to spur a lot of M&A action in the Aerospace, Defense, and Government sector. Less pie for everyone = consolidation IMO.

MM IB -> TMT Corporate Development

Feb 17, 2018
SECfinance:

Not saying it's better than any of the industries listed, but something to think about...

I think budget cuts are going to spur a lot of M&A action in the Aerospace, Defense, and Government sector. Less pie for everyone = consolidation IMO.

I think the same is true for healthcare.

"For I am a sinner in the hands of an angry God. Bloody Mary full of vodka, blessed are you among cocktails. Pray for me now and at the hour of my death, which I hope is soon. Amen."

Feb 17, 2018

if you are just looking for stability you want a strongly regulated sector. Look at FIG with all the new rules and guidelines - these will not stop coming. Infrastructure - Subsidies / government spending / regulation . Natural Resources - Regultion.

You could add lots of industries to the list but I guess the closest is A&D and healthcare as was said above.

just my point of view

Feb 17, 2018

O&G will be strong and has opportunity. I might be a bit bias but ADGS will always have opportunity because of the mass amount of companies there are out there especially because of the opportunity for prime and subcontracts within the government. Despite the defense budget going down, we will always need companies to make sweet weapons.

XX

Feb 6, 2018

Pharma/Biotech. This comes from a consultant with a medical science background.

You probably already know that the population is getting older and age-related diseases are on the rise (cancer, neurodegenerative and metabolic). One key trend is that large pharma shits their pants wayyyyy too much to make huge internal investments in these sectors so they wait for some genius in a biotech to strike gold, see if the drug reaches pre-clinical or phase 1 trials and buy that company. Want an example? Gilead ponied up $12Bn for Kite Pharma who does CAR-T therapies (google it) and there are about 20 more companies with similar pipeline products who don't have resources to sell them directly. Most are waiting for a buy-out and some for out-licensing opportunities. Either way, the market is moving.

Feb 8, 2018

What concert costs 45 cents? 50 Cent feat. Nickelback.

Feb 7, 2018

That's your justification? You see the names Amazon and JP Morgan and get rock hard? Everyone got boners with the Amazon - Whole Foods deal and yet now I can find countless articles saying how the culture clash could fuck it all up.

These guys may have deep pockets and yes, tech and AI will play a large role in healthcare but these guys know nothing about advanced biotechnologies and how new drug/therapy mechanisms work. Also, if you think that healthcare is the exact same thing as pharmaceuticals and biotech you need to go back to school...

Feb 17, 2018

None of these institutions are going anywhere. Certain divisions and departments may fade away with increasing regulations but innovative minds will come up with new processes to circumvent them. It has happened in the past and it will continue to do so in the future. My teacher uses the metaphor of formula one racing to explain this and I think he does so quite eloquently. Formula one regulators put requirements on the weight and size of the engines in the cars. Over time the brightest minds are able to create more efficient engines within the parameters to the point that regulators have to step in and create new restrictions. Similarly, bankers and quantitative experts created complex derivatives within legal confines that got so out of control that they caused a collapse. Now regulations are becoming tighter and the process will start again. The financial services industry is always adapting and shifting; I believe it will remain a strong magnet attracting top talent for the foreseeable future.

Talent is hitting a target no one can hit.
Genius is hitting a target no one can see.

Feb 7, 2018

Been in the markets for years now. There are opportunities aplenty in the entire marketplace right now, but I believe that technology will continue to be the leading sector for quite a while. The tech sector is so ubiquitous and far-reaching, on top of being such a broad category that covers so many different companies and sub-sectors, that I don't see any slow-down in the near future.

In addition to tech, healthcare (HC) is another leading sector that has plenty of upside still. With the baby-boomer generation reaching their twilight years, there will be an ever increasing need for HC professionals, HC institutions, HC research, etc. And yes, there is a difference, a very big difference, between HC and pharma. I believe pharma is an interesting sector, but one in which I do not participate in.

I'm a voracious reader, spend a minimum of an hour each day researching and reading about investment opportunities, business news, etc. Yet I have learned the hard way, several times, that one bad test, one negative test trial, one miss on earnings can send a pharms stock tumbling. And, when you own a pharma position, if the pharma sector goes down, your position will go down, regardless of its strength. Hence my decision over 5 years ago to stay out of pharma completely. Still dabble a bit in HC if it makes sense, but there is a lot of money to be made in tech and financials over the next couple of years. And if "the wall" actually does begin getting built, some infrastructure plays such as URI will be big winners.

Feb 7, 2018

Well put. The only thing that I would like to recommend is when looking at pharma/biotech avoid the large cap companies if you want to invest yourself. Finding the small firms on the verge of going public or recently IPOed is a better tactic because:
1. They deal with technology large companies don't often work with and the 'new factor' gives them ridiculous valuations
2. Yes, they get punished for trial misses but not as much as large cap and they can bounce back - one bad clinical study will not shut the company down
3. They often get showered with money even for small markets catered to only by a few. Yes, this means learning complex biology and searching for specific technologies but even rare disease companies who work in markets worth at most $1-2Bn can be bought out for 5 or 6X the value of the market they operate in

Feb 8, 2018

As long as people continue to get older, eat like shit, and not exercise, there will always be healthcare deals to be done, and arguably even if they do the second two, father time is currently ~100,000,000,000 to 0 in the people getting older and eventually running into age related problems category.

Feb 8, 2018

This is helpful, thanks!

Feb 8, 2018

Maybe not by relative size but by growth rate, most definitely the cannabis industry. The industry is already exploding despite a challenging regulatory environment and at a certain point, it's economically impossible to stop the momentum. It'll probably even be a key focus in the 2020 election. As you see social stigma declining and restrictions such as drug testing relaxed, I think the industry will transform into something we've never imagined could be possible

Check out my blog EjAhead.wordpress.com

Feb 11, 2018

I don't know much about this field but don't you think the issue here is that once a cannabis company gets large enough for legitimacy, Big Tobacco buys it up? Not sure if there are downsides to that, just curious as to what people think about this

Feb 11, 2018

Absolutely. Consolidation will be the name of the game, especially in the beginning as companies race to bring down production costs as legalization permits economies of scale. The Cokes and Budweisers of the cannabis universe will definitely be dominated by the scale players, particularly the sin corps.

That being said, I think the world is severely underlooking the numerous use cases cannabis provides outside of getting high. There's hundreds to thousands of cannabinoids in cannabis outside of the popular THC and CBD, most of which are still unexplored. I think sometime in the future cannabis will have a cryptocurrency-level of explosion where you'll start seeing the cannabis equivalent of ICOs. Tons of bullshit for sure but that's where you really start to see all the possible use cases begin to emerge

Check out my blog EjAhead.wordpress.com

Feb 8, 2018

Most definitely depositories. Depository bank m&a activity is absurd cause so many community banks fuckin suck and are getting bought by slightly bigger banks that know how to get a better ROI on their deposits. Long story short, get into FIG banking at a regional boutique, carve out a niche for yourself, and watch yourself get rich of the next 10-20 years

Feb 8, 2018
Feb 11, 2018

Home Video Brick and Mortar Retail.

Feb 14, 2018

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