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Retail Sales Returning to Pre-COVID 19 Level: Best ETF Areas
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Retail sales in the United States jumped 7.5% sequentially in June 2020, following an upwardly revised record 18.2% rise in May. The reading surpassed market forecasts of a 5% gain as the coronavirus-led lockdown eased further.
Consumer spending makes up about 70% of U.S. economic activity. Thus, any massive jump in it will likely brighten the economic growth picture. Below we highlight a few areas and the related ETFs that benefited the most. Notably, the winning areas matched with that of May.
Clothing
Many mall-based clothing stores were closed amid lockdowns. So, pent-up demand boosted spending in this segment. Apparel and accessories’ sales skyrocketed 105.1% sequentially in the month. However, sales were still 23.2% lower than Jun 2019.
Investors should note that apparel sales had skyrocketed 176.7% in May 2020 too. Apparel Retail takes about 14% of the fund SPDR S&P Retail ETF (XRT - Free Report) . Also, much of the focus of XRT shifted toward online stores lately, ensuring its smooth ride ahead.
For single-stock selection, Zacks Rank #2 (Buy) Shoe Carnival (SCVL) and Xcel Brands Inc (XELB) appear nice bets.
Electronics and Appliances
Sales of this category surged 37.4% sequentially. Year over year, sales were down 12.7%. In May 2020, sales gained 36.5% sequentially. Consumers’ interest in buying electronics products should keep demand for semiconductors higher and put VanEck Vectors Semiconductor ETF (SMH - Free Report) ) in a better position.
On the equity front, Zacks Rank #2 Vivint Smart Home Inc. (VVNT) appears a good bet. The company is a smart-home company functioning primarily in North America.
Furniture and Electronics
Furniture sales jumped 32.5% sequentially. Year over year, sales were down only 3.5%. In May 2020, sales spiked 79.1% sequentially. Home furnishing company Home Depot (HD) has considerable exposure to Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) and VanEck Vectors Retail ETF (RTH). So, these ETFs should win following the release of retail sales.
Investors can also bet on Zacks Rank #1 (Strong Buy) stocks like RH (RH) and Haverty Furniture Companies Inc. (HVT).
Sporting Goods, Hobby, Musical Instrument & Book Stores
This segment saw a surge in sales by 26.5%. Moreover, the segment’s sales were 20.6% higher year over year. In the previous month, sales had surged 78%. Such trends should bode well for all retail and consumer discretionary ETFs like XRT, XLY and RTH. In this regard, investors can place a bet on the nation's largest recreational boat and yacht retailer MarineMax Inc. (HZO), which has a Zacks Rank #1.
Restaurants
Sales in food services and drinking places saw an increase of 20% in June, though sales were 26.3% down year over year. In May, the segment recorded a 31.5% sales surge. A few restaurant stocks have exposure to Invesco Dynamic Leisure and Entertainment ETF (PEJ - Free Report) , so the fund stands to benefit.
As far as stocks are concerned, investors can bet on Zacks Rank #1 Papa Johns International Inc. (PZZA - Free Report) and Zacks Rank #2 Chipotle Mexican Grill Inc. (CMG).
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Retail Sales Returning to Pre-COVID 19 Level: Best ETF Areas
Retail sales in the United States jumped 7.5% sequentially in June 2020, following an upwardly revised record 18.2% rise in May. The reading surpassed market forecasts of a 5% gain as the coronavirus-led lockdown eased further.
Consumer spending makes up about 70% of U.S. economic activity. Thus, any massive jump in it will likely brighten the economic growth picture. Below we highlight a few areas and the related ETFs that benefited the most. Notably, the winning areas matched with that of May.
Clothing
Many mall-based clothing stores were closed amid lockdowns. So, pent-up demand boosted spending in this segment. Apparel and accessories’ sales skyrocketed 105.1% sequentially in the month. However, sales were still 23.2% lower than Jun 2019.
Investors should note that apparel sales had skyrocketed 176.7% in May 2020 too. Apparel Retail takes about 14% of the fund SPDR S&P Retail ETF (XRT - Free Report) . Also, much of the focus of XRT shifted toward online stores lately, ensuring its smooth ride ahead.
For single-stock selection, Zacks Rank #2 (Buy) Shoe Carnival (SCVL) and Xcel Brands Inc (XELB) appear nice bets.
Electronics and Appliances
Sales of this category surged 37.4% sequentially. Year over year, sales were down 12.7%. In May 2020, sales gained 36.5% sequentially. Consumers’ interest in buying electronics products should keep demand for semiconductors higher and put VanEck Vectors Semiconductor ETF (SMH - Free Report) ) in a better position.
On the equity front, Zacks Rank #2 Vivint Smart Home Inc. (VVNT) appears a good bet. The company is a smart-home company functioning primarily in North America.
Furniture and Electronics
Furniture sales jumped 32.5% sequentially. Year over year, sales were down only 3.5%. In May 2020, sales spiked 79.1% sequentially. Home furnishing company Home Depot (HD) has considerable exposure to Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report) and VanEck Vectors Retail ETF (RTH). So, these ETFs should win following the release of retail sales.
Investors can also bet on Zacks Rank #1 (Strong Buy) stocks like RH (RH) and Haverty Furniture Companies Inc. (HVT).
Sporting Goods, Hobby, Musical Instrument & Book Stores
This segment saw a surge in sales by 26.5%. Moreover, the segment’s sales were 20.6% higher year over year. In the previous month, sales had surged 78%. Such trends should bode well for all retail and consumer discretionary ETFs like XRT, XLY and RTH. In this regard, investors can place a bet on the nation's largest recreational boat and yacht retailer MarineMax Inc. (HZO), which has a Zacks Rank #1.
Restaurants
Sales in food services and drinking places saw an increase of 20% in June, though sales were 26.3% down year over year. In May, the segment recorded a 31.5% sales surge. A few restaurant stocks have exposure to Invesco Dynamic Leisure and Entertainment ETF (PEJ - Free Report) , so the fund stands to benefit.
As far as stocks are concerned, investors can bet on Zacks Rank #1 Papa Johns International Inc. (PZZA - Free Report) and Zacks Rank #2 Chipotle Mexican Grill Inc. (CMG).
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>