Back to top

Image: Bigstock

ETFs & Stocks to Win on Uptick in April Retail Sales

Read MoreHide Full Article

Retail sales in the United States increased 0.9% sequentially in April of 2022, after an upwardly revised 1.4% surge in March and matching market forecasts. The reading showed American consumers continued to spend despite red-hot inflation.

However, it marked the smallest gain in retail trade in four months. Consumer spending makes up about 70% of U.S. economic activity. Thus, any gain in it will likely brighten the economic growth picture. Year-on-year, retail sales increased 8.2%.

Below we highlight a few areas and the related ETFs & stocks that may benefit handsomely.

Winning Areas

Non-Store Retailers

Sales of this category rose 2.1% sequentially. Year over year, sales were up 12.7%. Consumers’ interest in buying products online kept the demand high for the segment.

ProShares Online Retail ETF (ONLN - Free Report) is a good bet to tap the winning trend of non-store retailers. The underlying ProShares Online Retail Index is a specialized retail index, tracking retailers that principally sell online or through other non-store channels.

For a single-stock selection, Zacks Rank #1 (Strong Buy) Solo Brands (DTC - Free Report) appears as a good pick. It is a DTC platform which offers products directly to consumers primarily online through lifestyle brands Solo Stove firepits, stoves, and accessories, Chubbies apparel, Oru Kayak, a folding portable kayak and Isle paddleboards.

Miscellaneous Store Retailers

Sales grew 4% sequentially in April and 18.6% year over year. Sales at department store rose 1.1% in April versus 2.9% in March. If job data remains stable, consumers may continue to splurge on activities.

Consumer Discretionary Select Sector SPDR ETF (XLY - Free Report) thus looks to be a great pick. The underlying Consumer Discretionary Select Sector Index of the fund seeks to provide an effective representation of the consumer discretionary sector of the S&P 500 Index.

Zacks Rank #1 Dillard's (DDS - Free Report) is a large departmental store chain featuring fashion apparel and home furnishings.

Food Services & Drinking Places

Sales of this category gained 2% sequentially in April and 19.8% year over year.

AdvisorShares Restaurant ETF (EATZ - Free Report) is a pureplay restaurant ETF. This ETF is active and does not track a benchmark.

The Zacks Rank #2 (Buy) Jack in the Box Inc. (JACK - Free Report) is a restaurant company that operates and franchises through Jack in the Box quick-service restaurants, and is one of the nation’s largest hamburger chains.

Motor Vehicle & Parts Dealers

Sales of this category gained 2.2% sequentially in April but fell 1.7% year over year.

First Trust SNetwork Future Vehicles & Technology ETF (CARZ - Free Report) follows the S-Network Electric & Future Vehicle Ecosystem Index constituents are chosen by selecting the eligible Pure-Play companies in descending order of float-adjusted market capitalization until 100 constituents have been selected.

The Zacks Rank #3 (Hold) AutoZone Inc. (AZO - Free Report) is one of the leading specialty retailers and distributor of automotive replacement parts and accessories in the United States.

Clothing

Apparel and accessories sales gained 0.8% sequentially in the month and 8% 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.

Zacks Rank #1 Boot Barn (BOOT - Free Report) appears a nice bet here. It operates as a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories.