Retail sales in the United States increased 0.6% sequentially in August 2020, following a downwardly revised 0.9% rise in July and compared to the forecast of a 1% uptick as unemployment benefits were reduced and support for small businesses ended.
Core retail sales, which exclude automobiles, gasoline, building materials and food services, dropped 0.1% last month after a downwardly revised 0.9% increase in July. Economists polled by Reuters had forecast core retail sales gaining 0.5% in August, as quoted on CNBC.
In short, U.S. retail sales grew in August for three successive months, but the momentum is slowing. Consumer spending makes up about 70% of U.S. economic activity. Thus, any jump or slowdown in it will make or break the economic growth picture. Against this wavering backdrop, below we highlight a few areas and the related ETFs that stayed afloat.
Sales in food services and drinking places saw an increase of 4.7% in August but were still 15.4% down year over year. A few restaurant stocks have exposure to Invesco Dynamic Leisure and Entertainment ETF PEJ, so the fund stands to benefit.
As far as stocks are concerned, investors can bet on Zacks Rank #1 (Strong Buy) Brinker International Inc. (EAT) and Zacks Rank #2 (Buy) Darden Restaurants Inc. (DRI).
Many mall-based clothing stores were closed amid lockdowns. So, pent-up demand has been boosting spending in this segment. Apparel and accessories’ sales gained 2.9% in the month, after recording solid gains in previous months. However, sales were still 20.4% lower than August 2019.
Apparel Retail takes about 14% of the fund SPDR S&P Retail ETF XRT. Also, much of the focus of XRT shifted toward online stores lately, ensuring its smooth ride ahead.
For single-stock selection, Zacks Rank #1 Sportsmans Warehouse Holdings Inc. (SPWH) and Zumiez Inc. (ZUMZ) appear as nice bets.
Furniture and Home Furnishing Stores
Furniture sales increased 2.1% sequentially. Year over year, sales were also up 3.8%. Home furnishing company Home Depot HD has considerable exposure to Consumer Discretionary Select Sector SPDR Fund XLY and VanEck Vectors Retail ETF (RTH). So, these ETFs should win following the release of retail sales. Investors can also bet on Zacks Rank #1 stocks like RH (RH) and WilliamsSonoma Inc. (WSM).
Electronics and Appliances
Sales of this category nudged up 0.8% sequentially. Year over year, sales were down only 2.4%. Consumers’ interest in buying electronics products should keep demand for semiconductors higher and put VanEck Vectors Semiconductor ETF SMH in a better position.
On the equity front, Zacks Rank #1 Best Buy Company Inc. BBY appears a good bet. Best Buy is a multinational specialty retailer of consumer electronics, home office products, entertainment software, communication, food preparation, wellness, heath, security, appliances and related services.
Health & Personal Care Stores
This segment saw an uptick in sales by 0.8%. Moreover, the segment’s sales were 5.6% higher year over year. Such trends should bode well for all retail and consumer staples ETFs like Consumer Staples Select Sector SPDR Fund XLP. In this regard, investors can place a bet on ColgatePalmolive Company CL, which has a Zacks Rank #3 (Hold).
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Click to get this free report The Home Depot, Inc. (HD) : Free Stock Analysis Report ColgatePalmolive Company (CL) : Free Stock Analysis Report Best Buy Co., Inc. (BBY) : Free Stock Analysis Report Brinker International, Inc. (EAT) : Free Stock Analysis Report Consumer Staples Select Sector SPDR ETF (XLP): ETF Research Reports SPDR SP Retail ETF (XRT): ETF Research Reports VanEck Vectors Semiconductor ETF (SMH): ETF Research Reports Sportsmans Warehouse Holdings, Inc. (SPWH) : Free Stock Analysis Report Consumer Discretionary Select Sector SPDR ETF (XLY): ETF Research Reports Invesco Dynamic Leisure and Entertainment ETF (PEJ): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report