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ETFs & Stocks to Win Despite Sluggish February Retail Sales
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U.S. retail sales nudged up 0.3% sequentially in February 2022, declining from an upwardly revised 4.9% surge in January and below market forecasts of a 0.4% gain. A spike in inflation led to the sluggish retail sales growth. Consumer spending makes up about 70% of U.S. economic activity. Thus, any slowdown in it will likely dim the economic growth prospects.
Below, we highlight a few areas and the related ETFs that should stay afloat despite the subdued December retail sales.
Clothing
Apparel and accessories sales skyrocketed 30.6% year over year in the month and 1.1% sequentially.
Apparel Retail takes about one-fifth share of the fund SPDR S&P Retail ETF (XRT). 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) Genesco (GCO) can be considered.
Building Material & Garden Equipment & Supplies Dealers
The segment Building Material & Garden Equipment & Supplies Dealers saw a 0.9% sequential gain in sales. Moreover, the segment’s sales were 14.8% higher year over year.
As far as the ETF is concerned, broad-based retail ETFs like Consumer Discretionary Select Sector SPDR ETF (XLY) and VanEck Retail ETF (RTH) should fit the bill.
Zacks Rank #2 (Buy) Central Garden & Pet T) may win from this trend. Central Garden is looking forward to strengthening its position as one of the leading companies in the U.S. pet supplies and lawn and garden supplies space.
Miscellaneous & Department Store Retailers
Sales grew 1.9% sequentially and 25.4% year over year. Plus, sales at Sporting Goods, Hobby, Musical Instrument, & Book Stores surged 1.7% sequentially and 11.7% year over year. Department store sales growth was up 1.6% sequentially and 22.8% year over year.
If jobs data remains stable and rates remain at an affordable level in the near term, consumers may continue to splurge on activities in this segment. Ebbing fear for the COVID infections should boost sporting activities.
Consumer Discretionary Select Sector SPDR ETF (XLY) thus looks to be a great pick in this segment. Coming to stocks, DICK'S Sporting Goods Inc. (DKS - Free Report) , with a Zacks Rank #3 (Hold), 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.
Restaurants
Sales in food services and drinking places were up 2.5% sequentially and up 33.0% year over year.
Restaurant stocks have exposure to AdvisorShares Restaurant ETF EATZ, so the fund stands to benefit. 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 revenues from the restaurant business.
As far as stocks are concerned, investors can bet on Zacks Rank #1 Dave & Buster's Entertainment (PLAY - Free Report) . This company is a leading owner and operator of high-volume venues in North America that combine dining and entertainment for both adults and families.
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ETFs & Stocks to Win Despite Sluggish February Retail Sales
U.S. retail sales nudged up 0.3% sequentially in February 2022, declining from an upwardly revised 4.9% surge in January and below market forecasts of a 0.4% gain. A spike in inflation led to the sluggish retail sales growth. Consumer spending makes up about 70% of U.S. economic activity. Thus, any slowdown in it will likely dim the economic growth prospects.
Below, we highlight a few areas and the related ETFs that should stay afloat despite the subdued December retail sales.
Clothing
Apparel and accessories sales skyrocketed 30.6% year over year in the month and 1.1% sequentially.
Apparel Retail takes about one-fifth share of the fund SPDR S&P Retail ETF (XRT). 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) Genesco (GCO) can be considered.
Building Material & Garden Equipment & Supplies Dealers
The segment Building Material & Garden Equipment & Supplies Dealers saw a 0.9% sequential gain in sales. Moreover, the segment’s sales were 14.8% higher year over year.
As far as the ETF is concerned, broad-based retail ETFs like Consumer Discretionary Select Sector SPDR ETF (XLY) and VanEck Retail ETF (RTH) should fit the bill.
Zacks Rank #2 (Buy) Central Garden & Pet T) may win from this trend. Central Garden is looking forward to strengthening its position as one of the leading companies in the U.S. pet supplies and lawn and garden supplies space.
Miscellaneous & Department Store Retailers
Sales grew 1.9% sequentially and 25.4% year over year. Plus, sales at Sporting Goods, Hobby, Musical Instrument, & Book Stores surged 1.7% sequentially and 11.7% year over year. Department store sales growth was up 1.6% sequentially and 22.8% year over year.
If jobs data remains stable and rates remain at an affordable level in the near term, consumers may continue to splurge on activities in this segment. Ebbing fear for the COVID infections should boost sporting activities.
Consumer Discretionary Select Sector SPDR ETF (XLY) thus looks to be a great pick in this segment. Coming to stocks, DICK'S Sporting Goods Inc. (DKS - Free Report) , with a Zacks Rank #3 (Hold), 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.
Restaurants
Sales in food services and drinking places were up 2.5% sequentially and up 33.0% year over year.
Restaurant stocks have exposure to AdvisorShares Restaurant ETF EATZ, so the fund stands to benefit. 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 revenues from the restaurant business.
As far as stocks are concerned, investors can bet on Zacks Rank #1 Dave & Buster's Entertainment (PLAY - Free Report) . This company is a leading owner and operator of high-volume venues in North America that combine dining and entertainment for both adults and families.