Last week was
Amazon’s ( AMZN Quick Quote AMZN - Free Report) ’s worst week since 2018, per CNBC, as the rising rate worries hit the growth stocks hard. Amazon’s shares slumped 12% last week. Amazon currently has a Zacks Rank #4 (Sell) with an unfavorable Zacks Style Score of D for both Value and Growth. And why not?
Amazon is pricey. At the time of writing,
its PEG ratio of 2.34X is almost double the industry average. Its forward P/E ratio is as high as 57.88X versus the industry average of 33.24X. Earnings yield is same as the industry average. Debt/equity ratio is higher than the industry average.
In fact, some Amazon-heavy consumer discretionary ETFs, including
ProShares Online Retail ETF ( ONLN Quick Quote ONLN - Free Report) , Consumer Discretionary Select Sector SPDR Fund ( XLY Quick Quote XLY - Free Report) , Fidelity MSCI Consumer Discretionary Index ETF ( FDIS Quick Quote FDIS - Free Report) , Vanguard Consumer Discretionary ETF (VCR) and VanEck Retail ETF ( RTH Quick Quote RTH - Free Report) , lost heavily last week. ONLN, XLY, FDIS, VCR and RTH were off 5.3%, 5.9%, 6.5%, 6.3% and 5.1% last week. These ETFs have lost 10.2%, 9.1%, 10.1%, 9.9% and 8.2%, respectively, this year. Time for Reopening Stocks and ETFs?
Rising rates have been a key drag for the growth and tech-oriented stock Amazon. Since the growth sector relies on easy borrowing for superior growth and its value depends heavily on future earnings, a rise in long-term yields cuts the present value of companies’ future earnings.
Apart from the rate issues, the economic reopening amid vaccination and easing Omicron concerns have been pushing investors away from stay-at-home tech and online stocks. Bad news from two pandemic winners –
Peloton ( PTON Quick Quote PTON - Free Report) and Netflix ( NFLX Quick Quote NFLX - Free Report) – also cemented the fact about changing trends. Netflix expects to add a meager 2.5 million users in the current quarter, well below the estimates. Peloton, meanwhile, is cutting costs to tackle the falling demand for its stationary bikes. Consumers Are Steady: They Are Moving Out Per a Reuters article, big U.S. banks believe that the current spending patterns indicate consumers’ prosperity. Healthy consumers having cash in the bank, are looking forward to spending as well as borrowing. However, they are now moving out. The below-mentioned example demonstrates the fact.
Foot traffic at the top 10 coffee chain performers was up 2.8% compared to two years ago in June 2021, Placer.ai found out (
per a Yahoo Finance article), but dining visits were off 4.6%. But in November, the coffee space witnessed an 8.4% jump in foot traffic compared with the 2019 levels, while December experienced a surge of 7.5% despite Omicron.
Against this backdrop, below we highlight a few reopening-oriented consumer discretionary ETFs that could be up for gains now. These ETFs fared better than the Amazon-heavy ETFs last week as well as so far this year.
Winning Consumer Discretionary ETFs in Focus ETFMG Travel Tech ETF (– Down 1.54% Last Week; Down 3% YTD AWAY Quick Quote AWAY - Free Report) ALPS Global Travel Beneficiaries ETF (– Down 3.4% Last Week; Down 4.3% YTD JRNY Quick Quote JRNY - Free Report) Defiance Hotel Airline and Cruise ETF (– Down 4.6% Last Week; Up 0.4% YTD CRUZ Quick Quote CRUZ - Free Report) SonicShares Airlines, Hotels, Cruise Lines ETF (– Down 5.3% Last week; Down 0.7% YTD TRYP Quick Quote TRYP - Free Report) VanEck Gaming ETF (– Down 0.2% Last Week; Down 3.6% YTD BJK Quick Quote BJK - Free Report)