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4 Funds to Benefit From Labor Day Weekend Sales

Zacks Equity Research

With Labor Day weekend around the corner, American consumers are looking up attractive deals to stock up on their favorite products. Americans could also plan a quick getaway this weekend, thanks to airline deals and hotel discounts.

Restaurants and cafes are expected to have greater footfall this holiday weekend as well. Therefore this could be an ideal time to buy mutual funds that invest in stocks well-positioned to benefit from this spending spree.

American Consumers’ Going Strong

Thanks to the impressive number of jobs created in July, there has been a remarkable rise in consumer spending. First, consumer spending was rather strong in the quarter ended June 2019 with Americans spending more on dining out, clothes, cars and trucks apart from participating in other similar activities.

Consumer confidence was reported at 135.1 in August, higher than analyst expectations of 128. Disposable personal income for June increased 0.4%, indicating the rise in household spending.

Finally, wage growth along with an unchanged unemployment rate in July has definitely boosted consumers’ spending.

Attractive Retail Deals to Boost Stocks

To bank on consumers’ readiness to spend this holiday weekend, retail giants have already come up with a string of offers and discounts. Big houses such as Amazon and Walmart are already offering notable discounts on everything from electronic products to cosmetics and mattresses.

Nordstrom, which is a chain of luxury department stores, is also offering discounts on apparel, footwear and fashion accessories etc. Sephora, Lowe’s, Best Buy, The Home Depot, Dell and Lenovo are offering great deals amid other companies as well. Therefore one can expect sales to soar this Labor Day weekend along with stock prices of such retailers.

Our Choices

We have, therefore, selected four mutual funds that invest in consumer discretionary, retail and leisure companies. All of these funds carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging year-to-date returns. Additionally, the minimum initial investment is within $5,000.

We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.

The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

Fidelity Select Leisure Portfolio FDLSX fund seeks capital growth. The fund invests the majority of its assets in companies that are engaged in the design, production and/or distribution of goods and/or services in the leisure industries. The fund chiefly invests in common stocks. Starbucks, Marriott International, Wynn Resorts, Chipotle Mexican Grill and Royal Caribbean Cruises are among the fund’s top 10 holdings.

This Zacks sector – Other product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FDLSX carries a Zacks Mutual Fund Rank #1. The fund has an annual expense ratio of 0.76%, which is below the category average of 1.23%. The fund has returned 27.7% on a year-to-date basis. FDLSX has no minimum initial investment.

Fidelity Select Consumer Discretionary Portfolio FSCPX fund invests the majority of its assets in common stocks of companies that manufacture or distribute consumer discretionary products and services. It aims for capital appreciation. Amazon.com, The Home Depot, Lowe's Companies, Nike and Royal Caribbean Cruises are among the fund’s top 10 holdings.

This Zacks sector – Other product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FSCPX carries a Zacks Mutual Fund Rank #1. The fund has an annual expense ratio of 0.78%, which is below the category average of 1.23%. The fund has returned 21.1% on a year-to-date basis. FSCPX has no minimum initial investment.

Fidelity Select Retailing Portfolio FSRPX fund seeks capital growth. The fund invests the majority of its assets in common stocks of companies that market finished goods and services to individual consumers. Amazon.com, The Home Depot, Lowe's Companies, Ross Stores and Burlington Stores are among the fund’s top 10 holdings.

This Zacks sector – Other product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FSRPX carries a Zacks Mutual Fund Rank #2. The fund has an annual expense ratio of 0.76%, which is below the category average of 1.23%. The fund has returned 19.7% on a year-to-date basis. FSRPX has no minimum initial investment.

Fidelity Select Consumer Staples Portfolio FDFAX fund aims for capital appreciation. The fund primarily invests in common stocks of companies. It invests the majority of its assets in securities of companies principally engaged in manufacture, sale or distribution of consumer staples. Coca-Cola, Procter & Gamble, Monster Beverage, PepsiCo and Costco Wholesale are among the fund’s top 10 holdings.

This Zacks sector – Other product has a history of positive total returns for more than 10 years. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FDFAX carries a Zacks Mutual Fund Rank #2. The fund has an annual expense ratio of 0.77%, which is below the category average of 1.19%. It has returned 22.5% on a year-to-date basis. FDFAX has no minimum initial investment.

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