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March Retail Sales Sparkles: Industry ETFs & Stocks to Win

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In March 2021, U.S. retail sales recorded the best gains in 10 months. Sales surged 9.8% sequentially, following a downwardly revised 2.7% decline in the previous month and easily beating market forecasts of a 5.9% increase. The $1,400 checks sent to consumers from mid-March, and improvement in the weather after winter storms in Texas and some other parts of the South region in February led to this gain.

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.

Clothing

Many mall-based clothing stores were closed amid lockdowns last year. So, pent-up demand boosted spending in this segment. Apparel and accessories sales skyrocketed 18.3% sequentially in the month and 101.1% year over year.

Apparel Retail takes about 19.3% of the fund SPDR S&P Retail ETF (XRT - Free Report) . The fund is thus well-positioned to benefit from the trend.

For single-stock selection, Zacks Rank #2 (Buy) Buckle Inc. (BKE - Free Report)  and Zacks Rank #1 (Strong Buy) Levi Strauss & Co. (LEVI - Free Report) appear as nice bets here.

Electronics and Appliances

Sales of this category surged 10.5% sequentially. Year over year, sales were up 28.5%.  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 #3 (Hold) Systemax Inc. SYX appears a good bet. The company is a direct marketer of brand name and private label products.

Books, Music, Hobby, Gardening & Sporting Goods

The segment sporting goods, hobby, musical instrument, & book stores saw a surge in sales by 23.5% sequentially. Moreover, the segment’s sales were 73.5% higher year over year.

Building material & garden equipment & supplies dealerstoo witnessed a sequential sales surge of 12.1% in the month. Year over year, sales shot up 29.4%.

Such trends bode well for all retail and consumer discretionary ETFs like XRT, XLY and RTH. In this regard, investors can place a bet on Central Garden & Pet Co. (CENT - Free Report) , which looks to strengthen its position as one of the leading U.S. companies in the pet supplies and lawn and garden supplies space. It has a Zacks Rank #1.

Restaurants

Sales in food services and drinking places saw a sales increase of 13.4% in March. Sales were up 36% year over year. 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 Jack In The Box Inc. (JACK - Free Report) ).

Motor Vehicle & Parts Dealers

Sales jumped 15.1% sequentially. Year over year, sales were up 71.1%. Auto ETF First Trust NASDAQ Global Auto ETF (CARZ - Free Report) is designed to track the performance of the largest and most-liquid companies engaged in manufacturing of automobiles (read: U.S. Inflation Hits More Than 2-Year High: ETFs & Stocks to Win).

Investors can also bet on Zacks Rank #3 AutoZone Inc. (AZO). The company is one of the leading specialty retailers and distributors of automotive replacement parts and accessories in the United States.

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