Understand the industry engine
Identify the demand drivers, cost structure, regulation, competition and capital intensity that influence how companies in the sector create value.
Connect the cycle to company results
Interest rates, currencies, commodity prices and government policy affect sectors differently. Test whether the expected tailwind is visible in orders, margins, cash flow or balance sheets.
Price still matters
A strong industry can be a poor investment at an unreasonable valuation. Compare expectations with history, peers and plausible downside scenarios before forming a view.