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Buy Online ETFs and Stocks for Black Friday & Beyond

Sanghamitra Saha
·4 min read

After almost round-the-year coronavirus-induced fear, the season of festivities — Holiday Season — has now officially set in. It is time for consumers to stack up their shopping carts. Over the last few years, online sales have gained precedence. The coronavirus outbreak has raised the appeal of the space even more as it has less to do with human contact. So, one can imagine the likelihood of exponential gains in eCommerce stocks and ETFs this year.

NRF noted that the retail sector has witnessed a V-shaped recovery as the aggregate retail sales has grown both sequentially and year over year each month since June. For the first 10 months of this year, retail sales were up 6.4% versus the first 10 months of 2019, per NRF.

Ecommerce sales were up 36.7% year over year during the third quarter. NRF expects that online and other non-store sales will grow between 20% and 30% this holiday season. Overall, the retail sector is expected to log a “strong finish” to 2020 despite COVID-19. Holiday sales will likely gain between 3.6% and 5.2% this year.This compared favorably “with a 4% increase to $729.1 billion last year and an average holiday sales increase of 3.5% over the past five years.”

Americans have already shelled out $58.9 billion online from Nov 1 to Nov 23, an extraordinary 32% year-over-year growth, according to new data by Adobe Analytics (quoted on a Yahoo Finance article), with 39% of the sales generated through smartphones (read: Solid Q3 Earnings Drive Retail ETFs Higher).

Big Four accounting firm Deloitte expects a rise in holiday retail sales between 1% and 1.5%. On the other hand, market research firm Forrester sees retail sales declining 2.5% for the full year, as quoted on Forbes. The Forbes article highlighted that Forrester sees online retail jumping 18.5% this year and attaining 20.2% overall penetration in North America.

Deloitte predicts e-commerce holiday retail sales to grow between 25% and 35% from November through January, reaching $182 billion to $196 billion in total. “For the last four years, e-commerce growth has averaged between 13% to 17% increase, and last year it was up 14.7%. This year it will go ballistic, somewhere around 25% and it may go higher,” per Deloitte’s vice chairman and U.S. leader of retail and distribution, as quoted in the Forbes article.

Shopping will be done early too as retailers would like to avert overcrowding in stores as well as the last-minute spike in online purchases that results in shipping problems. So, it is wise to tap stocks and ETFs as early as now since the shopping frenzy is going begin soon. Below we highlight a few ETFs that could see solid gains in the coming days.

ETF Picks

ProShares Online Retail ETF ONLN

The underlying ProShares Online Retail Index is a specialized retail index that tracks retailers which principally sell online or through other non-store channels. The fund charges 58 bps in fees.

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 revenues from online and virtual sales. The fund charges 65 bps in fees.

Stock Picks

The Home Depot Inc. HD

Consumers have been selling outon their homes throughout the pandemic and lockdowns. Since Home Depot has online presence, one can try the stock this holiday season. Home Depot posted a 24.6% increase in comps in the third quarter compared to the year-ago period. The stock has a Zacks Rank #3 (Hold).

Williams Sonoma WSM

Home and kitchen goods chain Williams-Sonoma witnessed its e-commerce sales jump 49% year over year during its latest quarter. The stock has a Zacks Rank #1 (Strong Buy).

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The Home Depot, Inc. (HD) : Free Stock Analysis Report
 
WilliamsSonoma, Inc. (WSM) : Free Stock Analysis Report
 
Amplify Online Retail ETF (IBUY): ETF Research Reports
 
ProShares Online Retail ETF (ONLN): ETF Research Reports
 
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