3 Sector ETFs & Stocks to Shine Despite Soft November Retail Sales

By Zacks Investment ResearchStock MarketsDec 17, 2020 02:30AM ET

www.investing.com/analysis/3-sector-etfs--stocks-to-shine-despite-soft-november-retail-sales-200548301

3 Sector ETFs & Stocks to Shine Despite Soft November Retail Sales

By Zacks Investment Research | Dec 17, 2020 02:30AM ET

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Retail sales in the United States fell 1.1% sequentially in November 2020, following a revised 0.1% decline in October. The reported sales also missed forecasts of a 0.3% decline. It marked the second successive decline in retail sales as U.S. consumers cut back on holiday shopping amid rising virus cases and a drop-off in income as unemployment benefits are set to decease, per tradingeconomics. Core retail sales which exclude automobiles, gasoline, building materials and food services fell 0.5%.

Consumer spending makes up about 70% of U.S. economic activity and thus gives a clear picture of the direction in which the economy is moving. The latest retail sales data showed that the resurgence in COVID-19 infections put a brake on consumer demand. This along with renewed lockdowns marred sales in November.

Below we highlight a few areas and the related ETFs that benefited despite the downbeat retail sales for the month of November.

Winning Sectors

Online Stores

Online and mail-order retail trade jumped 0.2% sequentially in November and 29.2% year over year.

Amazon.com Inc (NASDAQ:AMZN). AMZN

The Zacks Rank #3 (Hold) company is one of the largest online retailers. Its division Amazon Web Services (AWS) has become a dominant name in the cloud-computing market.

Amplify Online Retail ETF IBUY

The underlying EQM Online Retail Index utilizes a rules-based methodology to select a globally diverse group of companies with 70% or more of online and virtual sales. The fund charges 65 bps in fees.

Grocery Stores

Sales of this category gained 1.9% sequentially. Year over year, sales were up 10.5%. Consumers’ demand for essential goods should keep this area charged-up.

The Kroger (NYSE:KR) Co. KR

The company operates in the thin-margin grocery industry. The company has been refurbishing itself, not only with respect to products but also in terms of consumers’ preference for shopping groceries. The stock has a Zacks Rank #3.

Consumer Staples Select Sector SPDR Fund XLP

The Consumer Staples Select Sector SPDR ETF (NYSE:XLP) seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the Consumer Staples Select Sector Index. It charges 13 bps in fees. It also yields 2.44% annually (read: A Look Back At the S&P 500 Sector ETFs in 2020).

Health & Personal Care Stores

This segment saw a small decline in sales by 0.7%. Moreover, the segment’s sales were 3.5% higher year over year. Such trends should bode well for all retail and consumer staples ETFs.

ColgatePalmolive Company CL

Colgate-Palmolive (NYSE:CL) has considerable prominence in the segments like oral care, personal care and home care. It has a Zacks Rank #3.

XLP in Focus

The stock CL has about 4% weight in the consumer staples ETF XLP.

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ColgatePalmolive Company (CL): Free Stock Analysis Report

Amazon.com, Inc. (AMZN): Free Stock Analysis Report

The Kroger Co. (KR): Free Stock Analysis Report

Consumer Staples Select Sector SPDR ETF (XLP): ETF Research Reports

Amplify Online Retail ETF (IBUY): ETF Research Reports

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3 Sector ETFs & Stocks to Shine Despite Soft November Retail Sales

Winning Sectors

Online Stores

Grocery Stores

Health & Personal Care Stores

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