Background
The S&P 500 is a market index that also defines firms into sectors, industries that contain specific firms. A link is provided below with the standard sector/industry breakdown used by the S&P.
https://eresearch.fidelity.com/eresearch/markets_sectors/sectors/sectors_in_market.jhtml
The S&P 500 identifies ten different sectors and industries within each sector:
Consumer Discretionary (12 Industries)
Consumer Staples (6 Industries)
Energy (2 Industries)
Financials (8 Industries)
Health Care (6 Industries)
Industrials (14 Industries)
Information Technology (8 Industries)
Materials (5 Industries)
Telecommunication Service (2 Industries)
Utilities (5 Industries)
If you go to the link above, it will allow you to see each industry within the sectors. Sector analysis is fundamental to managing an investment portfolio that provides returns that are superior to market returns. This requires an understanding of the current economic conditions, forecasts about the future, and consensus forecasts about future earnings prospects within sectors/industries and specific firms.
Requirements
Exercise #2 is due by the end of Module 4.
In this exercise, you will need to select 1 to 3 sectors and then 1 industry within each sector to that you think will outperform the S&P 500 over the next year. In order to meet all the requirements for the financial analysis exercise #2, you are required to complete the following tasks:

1. Identify sectors and industry: The exercise #2 requires you to identify 1 to 3 sectors and 1 industry within each sector that will be used complete this exercise. The sectors selected should be on the basis of their past behavior that was pro cyclical, counter cyclical or a neutral sector sector/industry. The best place to start would be to scan the firms in each industry and look for familiar names from your own consumer experience or other sources. Then, roll back up to the industry and sector.
2. Perform fully analysis: The first part of the analysis is to perform a SWOT analysis on each sector/industry selected. Identifying its strengths, weakness, opportunities and threats. Look at the sector, such as utilities, they are neutral. People always need to electricity, water and gas. They are all highly regulated industries. A SWOT analysis might indicate that their strength is stability and neutrality but it would also be a threat to future growth and earnings potential. Opportunities could be to expand their base or acquire other firms, which could also be threat. Keep it simple but be thoughtful and provide perspective and insight.
3. Analyze past performance: This will require you to research on past performances during recessions and periods of growth, which will help you determine whether they are pro, counter, or neutral sector cyclically. This type of information should be readily available from numerous reliable internet sources, which includes: S&P, investment firms, but no Wikipedia or other nonacademically acceptable sources. Graphs should be readily available from these sources but any graphs should be sighted as to the source.
4. Present research on future economic scenarios: Another source of information would be consensus forecasts of the sector and industry performance. Many investment firms publish their predictions of earnings by firm, industry and sector. Do not rely on a single source but bring together the broad view of as many sources as possible.
5. Demonstrate why these particular sector(s)/industries will outperform the overall market: The last part of this particular project is to demonstrate why these particular sector(s)/industries will outperform the overall market. This requires understanding some of the key drivers in the industry such as consumer spending, consumer spending on durable products. This further requires using a combination of the historic data and interpolation about those relationships and how they will impact the industry in the future. For example, for this section if Consumer Discretionary sector were chosen and the industry Hotels, Restaurants and Leisure, there are likely parts of that industry that are counter cyclical such as McDonalds in the restaurant industry. They typically perform better in low growth or recessionary times while Chili’s and other sit down restaurants generally see a slowdown.