Thankfully, Thanksgiving raised a false alarm in the retail space. The sloth during the Thanksgiving weekend was finally made up and the U.S. holiday season turned out much stronger than the comparable period during the past few years, making 2014 a merry one for retailers. In all likelihood, purse strings were loosened as economic conditions brightened up, the job market improved and gasoline prices plunged.
Notably, consumer sentiment jumped to 93.6 in December from 88.8 in November, as per the Thomson Reuters/University of Michigan. The final reading represents the highest level in nearly eight years.
U.S. holiday retail sales climbed 5.5% year-over-year during the period of November 1 to December 24, as per MasterCard Advisors' SpendingPulse. Casual dining and lodging recorded double-digit sales, followed by mid single-digit growth in womenswear and single-digit growth in apparel and jewelry sales.
The reading from MasterCard Advisors' SpendingPulse reveals that the prediction of 4.1% growth in holiday sales by National Retail Federation (NRF) might just come true.
E-Commerce Driving Holiday Sales
While queuing up and camping out in front of stores has become an American tradition, e-commerce or online has become the major source of sales. This is especially true as online sales surged 15% year over year and hit $48.3 billion for the first 51 days of the November to December, as per the web analytics firm ComScore.
The heavy online traffic was seen in the most recent weekend before Christmas with 36% growth in sales. This was followed by 32% increase on Thanksgiving Day and 26% on Black Friday. Cyber Monday also emerged as a stronger online shopping day, hitting $2.04 billion in sales for the first time. Cyber Monday sales jumped 17% year over year (read: Internet ETFs and Stocks Set to Surge Post Cyber Monday).
Three Cheers for Semiconductors
Apart from retail, another corner of the broad market is also flourishing this holiday season. Though the holiday numbers have not yet been released, semiconductors enjoyed a huge rally with most of the companies hitting decade highs boosted by strong holiday optimism.
Capacity utilization, advanced technologies, smartphone upgrades, and new gadgets are fueling demand for chips and other semiconductor products. The PC market is stabilizing and is seeing accelerated growth thanks to the trend of replacing older devices.
While the holiday season fuelled a rally in many corners of the space like semiconductors, retail and consumer, some stocks and ETFs generated excellent returns and outpaced the broader market over the past one month by wide margins. Below are some of these in detail:
ETF Corner
SPDR S&P Semiconductor ETF (NYSE:XSD), ETF report
This fund provides exposure to the semiconductor segment of the broad U.S. technology market by tracking the S&P Semiconductors Select Industry Index. Holding 49 stocks in its portfolio, it is widely spread across each security as none of these allocates more than 2.80% of the assets. Cirrus Logic (NASDAQ:CRUS), RF Micro Devices (NASDAQ:RFMD), Skyworks Solutions (NASDAQ:SWKS) and TriQuint Semiconductor (NASDAQ:TQNT) are some of its top 10 holdings.
The product has a definite tilt toward small cap stocks at 61%, followed by 26% in mid caps and 14% in large caps. The fund is less popular and illiquid with AUM of $189.6 million and average daily volume of roughly 97,000 shares. It charges 35 bps in fees per year and has gained over 6% over the past month. XSD has a Zacks ETF Rank of 3 or ‘Hold’ rating with a High risk outlook (read: Semiconductor ETFs Riding High on Holiday Optimism).
PowerShares Retail Fund (NYSE:PMR), ETF report
This fund targets the retail sector and provides diversified exposure across market caps with 40% in large caps, 38% in small caps, and the rest in mid caps. This is easily done by tracking the Dynamic Retail Intellidex Index. The fund has accumulated just $23.3 million in its asset base while trades in light volume of about 10,000 shares a day. The ETF charges 63 bps in fees per year.
In total, the product holds 30 securities with moderate concentration of 46.7% across the top 10 holdings. Walgreen (WAG), Kroger (KR) and Lowe's (LOW) are the top three holdings in the find’s basket. In terms of industrial exposure, specialty retail takes the top spot at 40%, while food retail (21%) and hypermarkets (12%) round off the top three positions. PMR has gained nearly 5% over the trailing one-month period and has a Zacks ETF Rank of 3 with a Medium risk outlook.
Market Vectors Retail ETF (NYSE:RTH), ETF report
This fund provides exposure to the retail segment of the broad consumer space by tracking the Market Vectors US Listed Retail 25 Index. It holds about 26 stocks in its basket with AUM of $169.8 million, while average daily volume is light under 46,000 shares. Expense ratio came in at 0.35%.
The product is a large cap centric and heavily concentrated on the top 10 holdings with 63.5% of assets. The largest allocations go to Wal-Mart Stores (WMT), Amazon.com (AMZN) and Home Depot (HD). Sector wise, specialty retail occupies the top position with less than one-third share, followed by double-digit allocation to hypermarkets, drug stores, departmental stores, and health care services. RTH is up over 3% over the past one month and has a Zacks ETF Rank of 3 with a Medium risk outlook.
Stock Corner
American Apparel Inc. (NYSE:APP), Snapshot Report
Based in Los Angeles, CA, American Apparel is a leading manufacturer, distributor, and retailer of branded fashion basic apparel products for young adults and people of all ages, with both wholesale and retail divisions globally. The stock surged 76.7% over the past one month and has a Zacks Rank #3 (Hold) (read: Strength Seen in American Apparel: Stock Shoots 19%).
Spansion Inc. (NYSE:CODE), Snapshot Report
Based in Sunnyvale, CA, Spansion is a global leader in Flash memory-based embedded systems solutions. Flash memory is used in nearly every electronic device including cars, printers, networking equipment, set-top boxes, high-definition TVs, games, cell phones and other consumer electronics. The stock gained nearly 52% over the past one month and carries a Zacks Rank #3.
Pantry Inc. (NASDAQ:PTRY), Snapshot Report
Based in Cary, NC, The Pantry is a leading convenience store operator in the southeastern United States. Its stores provide a wide range of merchandise, as well as fuel and other ancillary services including tobacco products, beer, soft drinks, self-service fast food and beverages, publications, dairy products, groceries, health and beauty aids, video games and money orders (read: The Pantry: Strong Industry, Solid Earnings Estimate Revisions). The stock gained over 42% in the trailing one-month period and has a Zacks Rank #2 (Buy).