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ETFs & Stocks to Win Despite a Stagnant July Retail Sales

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Retail sales in the United States unexpectedly stalled in July of 2022, missing market expectations of a 0.1% increase as sales declined at gasoline stations and car dealers. Consumer spending makes up about 70% of U.S. economic activity. Thus, any gain/loss in it will likely brighten/hamper the economic growth picture.

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 2.7% sequentially. Year over year, sales were up 20.2%. Consumers’ interest in buying products online kept the demand high for the segment. Sales at non-store retailers jumped 2.7% boosted in large part by Amazon’s Prime Day event on July 12 and 13.

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 #2 (Buy) ContextLogic (WISH - Free Report) appears as a good pick. ContextLogic is a global commerce company. Their vision is to unlock ecommerce for consumers and merchants by providing consumers access to a vast selection of affordable products and by providing merchants access to hundreds of millions of consumers globally.

Miscellaneous Store Retailers

Sales grew 1.5% sequentially in July and 17.8% year over year.

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 (Strong Buy) 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 0.1% sequentially in July and 11.6% 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 Ruth's Hospitality Group (RUTH - Free Report) is the largest fine dining steakhouse company in the U.S. as measured by the total number of Company-owned and franchisee-owned restaurants, with over 150 Ruth's Chris Steak House locations worldwide specializing in USDA Prime grade steaks served in Ruth's Chris' signature fashion - sizzling.

Food & Beverage Stores

Food & Beverage stores’ sales gained 0.2% sequentially in the month and 8.4% year over year. VanEck Retail ETF (RTH - Free Report) has considerable focus on Walmart. The fund follows the MVIS US Listed Retail 25 Index tracks the overall performance of companies involved in retail distribution, wholesalers, on-line, direct mail and TV retailers, multi-line retailers, specialty retailers and food and other staples retailers.

Zacks Rank #3 The Kroger Co. (KR - Free Report) operates in the thin-margin grocery industry.

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