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ETF Areas & Stocks to Win on Upbeat May Retail Sales
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In an unanticipated turn of events, retail sales in the United States saw a 0.3% rise month-on-month in May 2023. This comes after a 0.4% surge in April and outperforms market predictions of a 0.1% downturn, per tradingeconomics. As for core retail sales, which exclude car sales, gasoline, building materials, and food services, they saw a 0.2% rise, succeeding a 0.6% increase in April.
The statistics imply that consumer spending stays robust, undeterred by the increase in inflation and interest rates. The most substantial growth was observed in the sale of building materials and garden equipment (2.2%), along with motor vehicles and parts (1.4%).
There was also an increase in expenditure at food services and drinking establishments, general merchandise stores, furniture outlets, food and beverages shops, and retailers specializing in sporting goods, hobby materials, musical instruments, & books – all recording a 0.4% growth. Meanwhile, electronic and appliances stores witnessed a 0.2% increment.
Conversely, sales at health and personal care outlets, as well as clothing stores, remained stagnant. There was a significant drop of 2.6% at gasoline stations and a 1% decrease at miscellaneous store retailers.
Below we highlight a few areas and the related ETFs that may benefit handsomely.
Winning Areas
Building Material & Garden Equipment & Supplies Dealers
The segment Building Material & Garden Equipment & Supplies Dealers saw a 2.2% sequential gain in sales. However, the segment’s sales were 0.9% higher year over year.
As far as the ETF is concerned, broad-based retail ETFs like Consumer Discretionary Select Sector SPDR ETF (XLY - Free Report) and VanEck Retail ETF (RTH - Free Report) should fit the bill.
Zacks Rank #1 (Strong Buy) Owens Corning (OC - Free Report) is a world leader in building materials systems and composite solutions.
Motor Vehicle & Parts Dealers
Sales of this category gained 1.4% sequentially in January and up 4.4% year over year.
First Trust S-Network 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.
Group 1 Automotive Inc. (GPI - Free Report) is one of the leading automotive retailers in the world, with operations primarily located in the United States and the UK. The stock has a Zacks Rank #3 (Hold).
Sporting Goods, Hobby, Musical Instrument, & Book Stores
Sporting goods, hobby, musical instrument, & book stores sales gained 0.3% sequentially in May and 1.2% 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.
Coming to stocks, DICK'S Sporting Goods Inc. (DKS - Free Report) , with a Zacks Rank #3, operates as a major omni-channel sporting goods retailer, offering athletic shoes, apparel, accessories and a broad selection of outdoor and athletic equipment for team sports, fitness, camping, fishing, tennis, golf, water sports, etc.
Food and Drink Places
Sales at restaurants and bars increased 8% year over year and 0.4% sequentially. This positions the following fund and stock better.
AdvisorShares Restaurant ETF (EATZ - Free Report) – The AdvisorShares Restaurant ETF is an actively managed exchange-traded fund that seeks to achieve its investment objective by investing at least 80% of its net assets in securities of companies that derive at least 50% of their net revenue from the restaurant business. The fund charges 99 bps in fees.
McDonald's (MCD - Free Report) –Zacks Rank #2 (Buy) McDonald’s is a leading fast-food chain that currently operates more than 39,000 restaurants in more than 100 countries. The fund has a Zacks Rank #2.
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ETF Areas & Stocks to Win on Upbeat May Retail Sales
In an unanticipated turn of events, retail sales in the United States saw a 0.3% rise month-on-month in May 2023. This comes after a 0.4% surge in April and outperforms market predictions of a 0.1% downturn, per tradingeconomics. As for core retail sales, which exclude car sales, gasoline, building materials, and food services, they saw a 0.2% rise, succeeding a 0.6% increase in April.
The statistics imply that consumer spending stays robust, undeterred by the increase in inflation and interest rates. The most substantial growth was observed in the sale of building materials and garden equipment (2.2%), along with motor vehicles and parts (1.4%).
There was also an increase in expenditure at food services and drinking establishments, general merchandise stores, furniture outlets, food and beverages shops, and retailers specializing in sporting goods, hobby materials, musical instruments, & books – all recording a 0.4% growth. Meanwhile, electronic and appliances stores witnessed a 0.2% increment.
Conversely, sales at health and personal care outlets, as well as clothing stores, remained stagnant. There was a significant drop of 2.6% at gasoline stations and a 1% decrease at miscellaneous store retailers.
Below we highlight a few areas and the related ETFs that may benefit handsomely.
Winning Areas
Building Material & Garden Equipment & Supplies Dealers
The segment Building Material & Garden Equipment & Supplies Dealers saw a 2.2% sequential gain in sales. However, the segment’s sales were 0.9% higher year over year.
As far as the ETF is concerned, broad-based retail ETFs like Consumer Discretionary Select Sector SPDR ETF (XLY - Free Report) and VanEck Retail ETF (RTH - Free Report) should fit the bill.
Zacks Rank #1 (Strong Buy) Owens Corning (OC - Free Report) is a world leader in building materials systems and composite solutions.
Motor Vehicle & Parts Dealers
Sales of this category gained 1.4% sequentially in January and up 4.4% year over year.
First Trust S-Network 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.
Group 1 Automotive Inc. (GPI - Free Report) is one of the leading automotive retailers in the world, with operations primarily located in the United States and the UK. The stock has a Zacks Rank #3 (Hold).
Sporting Goods, Hobby, Musical Instrument, & Book Stores
Sporting goods, hobby, musical instrument, & book stores sales gained 0.3% sequentially in May and 1.2% 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.
Coming to stocks, DICK'S Sporting Goods Inc. (DKS - Free Report) , with a Zacks Rank #3, operates as a major omni-channel sporting goods retailer, offering athletic shoes, apparel, accessories and a broad selection of outdoor and athletic equipment for team sports, fitness, camping, fishing, tennis, golf, water sports, etc.
Food and Drink Places
Sales at restaurants and bars increased 8% year over year and 0.4% sequentially. This positions the following fund and stock better.
AdvisorShares Restaurant ETF (EATZ - Free Report) – The AdvisorShares Restaurant ETF is an actively managed exchange-traded fund that seeks to achieve its investment objective by investing at least 80% of its net assets in securities of companies that derive at least 50% of their net revenue from the restaurant business. The fund charges 99 bps in fees.
McDonald's (MCD - Free Report) –Zacks Rank #2 (Buy) McDonald’s is a leading fast-food chain that currently operates more than 39,000 restaurants in more than 100 countries. The fund has a Zacks Rank #2.