Should you invest in industries with the highest sales growth projections?

While aggressive corporate cost cutting is helping keep bottom lines from shrinking as fast as they otherwise might, the real problem for investors is the even bigger plunge in the sales of their top lines. Yet if a Goldman Sachs Group (GS) analyis is correct, there are three industries which should enjoy a boost in revenues. So, it might be worth looking at stocks in those industries.

Before getting into those three sectors, it is worth noting that most companies have been beating Wall Street earnings expectations this year, which could help explain the rise in the stock market. The New York Times reports that almost 75 percent of S&P 500 companies have already announced quarterly results that beat analysts' forecasts. In the first quarter of 2009, roughly 66 percent of the S&P 500 exceeded those expectations.

But while companies have been slashing costs to the bone, their revenues have been sliding even more. In the second quarter, the selling, general and administrative costs of the S&P 500 companies declined 5.7 percent -- far more than those costs declined in the 1991 and 2001 recessions.

But the bigger concern for investors is that the decline in corporate revenues has been accelerating. In the fourth quarter of 2008, sales tumbled 14 percent -- by the first quarter of 2009, that rate was up to 17 percent. In the second quarter of this year, it edged up to 20 percent. That represents a $1.15 trillion plunge in S&P 500 sales between the second quarters of 2008 and 2009.

But there is good news on the revenue front for 2010, according to Goldman analysts. They expect three industries to enjoy significant sales growth in 2010: sales in the energy sector will rise 17 percent; sales in the tech sector will increase seven percent; and in materials, sales will climb six percent.

If you agree, now might be a good time to look for leaders in these industries -- particularly since each of them earns at least half their sales overseas, which might provide them with faster growing demand. This recent market reversal may even make the stocks in these industries cheaper than they would have been last month.

Peter Cohan is a management consultant, Babson professor and author of eight books including, You Can't Order Change. Follow him on Twitter. He has no financial interest in the securities mentioned.

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