We’ll take a quick break from the vendor/lender equipment financing relationship and answer an interesting e-mail I got the other day. John writes:
Hey Fletch, do me a favor. Because you write equipment leases, you probably know business trends better than most. Can you tell me what industries are hot or emerging so I can have a clue as to what stocks to buy?
Errr… have you seen my stock portfolio, John? Know how well it’s performed lately? Equipment financing guru or not, my method of picking stocks is about as effective as throwing darts after drinking a bottle of scotch… ok, I jest, it’s not THAT bad, but I’m not sure I’m qualified to give investment advice (Mrs. Fletch just said “no, you aren’t”).
But you did ask about trends and hot industries in equipment financing -I can help you there. And in looking at our equipment financing portfolio (that term is fodder for a future post), I can tell you the following industries appear on the upswing:
- Medical: This is probably pretty obvious, but as the baby boomers age, the need for medical services increases. And besides IT, there is no field that relies on new technology more than medicine. There’s ALWAYS some new piece of expensive equipment to buy. So medical equipment leasing is a strong part of our business right now. Also, even in hard times, people are not likely to put off medical treatment, so it’s almost recession-proof.
- Hardware / Technology: Financing technology equipment has always been strong. New servers/etc mean more efficient operations and help companies run leaner. During economic downswings, companies must do more with less, and investing in technology is almost always a profitable move (especially if you lease computer equipment – I’ve talked on this blog about how this is profitable, especially if you use section 179.)
- Software: This shiny new hardware I mention above needs software to run, so it’s logical to assume that the software industry remains strong. And according to my records, leasing software is an area that remains steady.
So anyway, to answer your question John, the above industries are definitely strong right now (at least in an equipment financing sense). But again, I do not know how useful this is in terms of picking stocks. In fact, based on Mrs. Fletch’s opinion, I should move to bourbon.