The back-to-school season has entered its peak month and retailers are busy with initiatives to perk up sales. This is the second-busiest shopping season (mid July to mid September) after the Christmas holidays, with sales generally picking up in the final weeks.
As per the National Retail Federation (NRF), combined spending on K-12 school and college is expected to reach $80.7 billion for this year, down from last year’s $82.8 billion spending. Consumer spending is expected to reach nearly $26.2 billion or $696.70 per household on K-12 back-to-school items, while $54.5 billion or $976.78 per household on college items.
Families with children in elementary through high school is expected to spend an average of $239.82 on clothing and accessories, $203.44 on electronics and $135.96 on shoes. Meanwhile, college shoppers plan to spend about $234.69 on electronics, $148.54 on clothing and accessories, and $120.19 on dorm and apartment furnishings (read: ETFs to Buy as Americans' Confidence Nears 19-Year High).
Departmental stores, discount stores and online retailers are the most-attractive shopping destinations. About 53% of back-to-school shoppers and 39% of back-to-college customers will drive to departmental stores, while 50% and 39%, respectively, will shop in discount stores. Moreover, 49% and 45% of shoppers plan to spend online for school and college, respectively. According to Deloitte estimates, mobile shopping among back-to-school shoppers is expected to grow to 60%, up from 53% in 2018.
How to Play
Back-to-school shopping will definitely boost sales of retailers, leading to a surge in their stock prices. Investors could easily tap this opportune moment through the following ETFs & stocks:
SPDR S&P Retail (NYSE:) ETF XRT
This product tracks the S&P Retail Select Industry Index, holding 87 securities in its basket with each accounting for less than 2.2% of assets. Apparel retail takes the top spot at 22.3% share while automotive retail, Internet & direct marketing retail and specialty stores round off the next three spots with a double-digit allocation each. The fund has amassed $265.4 million in its asset base and charges 35 bps in annual fees. The fund has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: Consumer ETFs in Focus on Fresh Tariff Threats).
Amplify Online Retail ETF IBUY
This ETF offers global exposure to companies that derive 70% or more revenues from online and virtual retail by tracking the EQM Online Retail Index. The fund comprises 40 stocks that are widely diversified, with each holding not more than 5.7% of the assets. It has attracted $251.1 million in its asset base and charges 65 bps in fees per year. IBUY trades in average daily volume of 42,000 shares.
ProShares Online Retail ETF ONLN
This ETF focuses on global retailers that derive significant revenues from online sales. It tracks the ProShares Online Retail Index, holding 25 stocks in its basket with the highest concentration going to the top firm, Amazon (NASDAQ:) with one-fourth share. American firms make up three-fourth of the portfolio, while China accounts for 20.9% share and Argentina-based companies have a minor share at 2.2%. ONLN has accumulated $22.4 million in a month and charges 58 bps in annual fees. It witnesses an average daily volume of 12,000 shares.
VanEck Vectors Retail ETF (TSXV:)
This fund provides exposure to the 25 largest retail firms by tracking the MVIS US Listed Retail 25 Index. It is highly concentrated on Amazon at 19.6% while the other firms hold no more than 11% share. The ETF has a certain tilt toward specialty retail, which accounts for 32% share while Internet & direct marketing (21%), hypermarkets (15%), and department stores (12%) round off the next three spots. The product has amassed $70.5 million in its asset base and charges 35 bps in annual fees. RTH trades in volume of 8,000 shares per day on average and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (see: all the Consumer Discretionary ETFs here).
Target Corporation (NYSE:)
This company operates as a general merchandise retailer in the United States. It offers beauty and household essentials; food assortments, including perishables, dry grocery, dairy, and frozen items; and apparel, accessories, home decor products, electronics, toys, seasonal offerings, and other merchandise. The stock saw solid earnings estimate of 21 cents for fiscal year (ending Jan 2020) over the past 30 days with an estimated earnings growth rate of 13.73%. It has a Zacks Rank #2 (Buy) and VGM Score of A.
JD.com Inc. (NASDAQ:)
It operates as an e-commerce company and retail infrastructure service provider in the People's Republic of China. The stock saw solid earnings estimate of 17 cents for this year over the past 30 days with an estimated earnings growth rate of 155.88%. It has a Zacks Rank #1 (Strong Buy) and VGM Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
Burlington Stores Inc. (NYSE:)
This company operates as a retailer of branded apparel products in the United States. It offers fashion-focused merchandise, including women's ready-to-wear apparel, accessories, footwear, menswear, youth apparel, coats, toys, and gifts, as well as baby, home, and beauty products. The stock saw solid earnings estimate of 17 cents for fiscal year (ending January 2020) over the past 30 days and has an estimated earnings growth rate of 11.49%. It has a Zacks Rank #2 and VGM Score of A.
Boot Barn Holdings Inc. (NYSE:)
This company operates as a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories. It saw earnings estimate revision of 14 cents for fiscal year (ending March 2020) over the past 90 days and has an estimated growth rate of 22.22%. Boot Barn has a Zacks Rank #1 and VGM Score of B.
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JD.com, Inc. (JD): Free Stock Analysis Report
Amplify Online Retail ETF (IBUY): ETF Research Reports
SPDR S&P Retail ETF (XRT): ETF Research Reports
VanEck Vectors Retail ETF (RTH): ETF Research Reports
Burlington Stores, Inc. (BURL): Free Stock Analysis Report
Target Corporation (TGT): Free Stock Analysis Report
Boot Barn Holdings, Inc. (BOOT): Free Stock Analysis Report
ProShares Online Retail ETF (ONLN): ETF Research Reports
Original post
Zacks Investment Research
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