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ETFs, Stocks to Tap Last-Minute Back-to-School Shopping

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The pandemic has led to a global digital shift in almost all business categories and education is not behind. As such, the back-to-school season, the second-busiest shopping season (mid July to mid September) after the Christmas holidays, seems different this year with more of distance learning. Despite this trend, back-to-school shopping is in full swing and spending is expected to hit new records.

As per the National Retail Federation (NRF), combined spending on K-12 school and college will reach $101.6 billion this year, exceeding last year’s $80.7 billion and topping the $100 billion mark for the first time. Consumer spending is expected to reach nearly $33.9 billion or $789.49 per household on K-12 back-to-school items, up from $26.2 billion or $696.70 per household seen last year and the $30.3 billion record set in 2012 (read: Will ETFs Gain on Upbeat U.S. Consumer Sentiments in August?).

Meanwhile, spending on college items will likely reach $67.7 billion or $1,059.20, exceeding that of the previous year’s $54.5 billion or $976.78 per household and breaking the record of $55.3 billion set in 2018.

What’s Different This Year?

Unlike every year, the new theme — technology education — has emerged this year. Families that were looking at calculators or a new smartphone last year are now looking at bigger dollar items like laptops, tablets, chromebooks, desktops, wireless earbuds and smart speakers.

More consumers say about 63% expect school and college classes to take place online, up from 55% predicted a month ago by the NRF. Of these, 76% plan to make purchases specifically because of online learning, up from 72% from the previous forecast. The prime focus will be on computers and other electronics. About 37% is planning to buy laptops, 26% will buy accessories such as a mouse or flash drive and 23% is expecting to buy desks or chairs to furnish home classrooms (read: 5 Tech ETFs at the Forefront of the Latest Sector Rally).

The latest NRF survey also found out that 34% expect to spend more than what was anticipated in July. Around 54% said that is because they plan to spend more on electronics and computer equipment. But with growing children needing new clothes whether they are at school or at home and many supplies are needed either way, 47% said they are spending more on clothing and 59% said the higher spending would come in the form of school supplies such as pencils and notebooks. Only 25% expect to spend less, and 42% expect to spend the same as they had thought in July.

How to Play

Even though the back-to-school shopping season will provide a boost to brick-and-mortar retailers, technology product and equipment suppliers seem to the biggest beneficiaries of the new trend. Investors could easily tap this opportune moment through the following ETFs & stocks:

Global X Education ETF (EDUT - Free Report)

This ETF debuted in the space on Jul 10 and has already attracted $6.4 million in its asset base. It seeks to invest in companies providing products and services that facilitate education, including online learning and publishing educational content, as well as those involved in early childhood education, higher education and professional education. The fund follows the Indxx Global Education Thematic Index and holds 37 stocks in its basket. It charges 50 bps in annual fees and trades in average daily volume of 14,000 shares.

VanEck Vectors Retail ETF (RTH - Free Report)

This fund provides exposure to the 25 largest retail firms by tracking the MVIS US Listed Retail 25 Index. The product has amassed $170.7 million in its asset base and charges 35 bps in annual fees. It trades in volume of 13,000 shares per day on average and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.

iShares U.S. Technology ETF (IYW - Free Report)

This ETF offers exposure to 161 U.S. electronics, computer software and hardware, and informational technology companies by tracking the Dow Jones US Technology Index. The fund has amassed $6.5 billion in its asset base and charges 42 bps in fees and expenses. Volume is good as it exchanges nearly 134,000 shares in hand a day. The fund has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook (read: 5 Top-Ranked ETFs to Taste Apple's $2 Trillion Market Cap).

Direxion Work From Home ETF (WFH - Free Report)

This product offers exposure to companies across four technology pillars — cloud, cybersecurity, online project and document management, and remote communications — that allow investors to gain exposure to those companies that stand to benefit from an increasingly flexible work environment. It tracks the Solactive Remote Work Index and holds 41 stocks in its basket. The fund has accumulated $100.1 million in its asset base since its debut on Jun 25 and charges investors 45 bps in annual fees. It trades in average daily volume of 134,000 shares.

Best Buy Co. Inc. (BBY - Free Report)

It is a multinational specialty retailer of consumer electronics, home office products, entertainment software, communication, food preparation, wellness, heath, security, appliances and related services. The stock saw solid earnings estimate revision of $1.47 for the fiscal year (ending Jan 2021) over the past month and has an estimated growth rate of 17.3%. Best Buy has a Zacks Rank #1 (Strong Buy) and a VGM Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.

Chegg Inc. (CHGG - Free Report)

This social education platform rents and sells print textbooks. The stock saw positive earnings estimate of 7 cents for this year over the past 30 days with an estimated earnings growth rate of 39.6%. It has a Zacks Rank #3 (Hold) and VGM Score of B.

HP Inc. (HPQ - Free Report)

This company is a leading global provider of personal computing and other access devices, imaging and printing products, and related technologies, solutions and services to individual consumers, SMBs and large enterprises, including customers in the government, health and education sectors. It saw positive earnings estimate revision of 9 cents in a month for fiscal year (ending October 2021). The stock has a Zacks Rank #3 and VGM Score of A.

Airgain Inc. (AIRG - Free Report)

It is a provider of embedded antenna technologies. The company offers antennas for devices that are deployed in carrier, enterprise and residential wireless networks and systems, including set top boxes, access points, routers, gateways, media adapters and digital televisions. The stock saw solid earnings estimate of 20 cents for this year over the past 30 days. It has a Zacks Rank #2 and VGM Score of B (see: Retail ETFs Look Strong Post Q2 Earnings).

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