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ETF & Stock Picks to Defy Subdued US Retail Sales in August

Sanghamitra Saha

After gaining 0.7% in July, U.S. retail sales registered a 0.1% sequential rise in August. The reading fell shy of analysts’ expectations of a 0.4% increase. It marked the smallest uptick in retail sales in six months, mainly thanks to a decline in purchases of motor vehicles, clothing and furniture.

Barring automobiles, gasoline, building materials and food services, retail sales grew 0.1% in August, following an upwardly revised 0.8% increase in July. On a year-over-year basis, retail sales increased 6.6% in August compared with a 6.7% rise in July.

Eight out of the 13 major retail categories exhibited a rise in sales in August from the previous month, as per tradingeconomics. Sales at miscellaneous stores, gasoline stations, health and personal care stores and online retailing were among the key drivers.

A solid labor market and higher take-home pay amid tax reductions probably drove Americans' ability to spend. After all, annual wage growth shot up at its fastest clip in more than nine years in August and there were a record 6.9 million job openings in July, per Reuters (read: August Wage Growth Hits 9-Year High: ETFs & Stocks to Surge).

Still, sales dropped at furniture and home furniture stores (down 0.3% compared with 0% in July), motor vehicles and part dealers (down 0.8% compared with a decline of 0.1%) and clothing and accessories stores (down 1.7% compared with a gain of 2.2%).

Against this backdrop, we recommend a few ETFs and stocks that defied the decline in August retail sales data (read: Wave of Solid Q2 Results Boosts Retail ETFs).

Online Stores

Though brick-and-mortar retailers have been steady in recent times, the appeal of online retailing has been high. Sales at online and mail-order retail trade increased 0.7% after 1.5% gains in July). Such consistency puts Amplify Online Retail ETF IBUY in focus. ProShares Long Online/Short Stores ETF CLIX also deserves a look.

Amazon.com, Inc. AMZN

The Zacks Rank #2 (Buy) company is in the retail sale of consumer products and subscriptions in North America and internationally. It comes from a top-ranked Zacks sector (top 50%).

Energy

Sales at gasoline stations rose 1.7% against 0.8% in July. Gasoline prices have been high lately. In fact, gas prices hit a four-year high on Labor Day.

Investors thus can take a lookat US Commodity Funds United States Gasoline Fund LP UGA. The underlying index of the fund looks to reflect the changes in the price of gasoline. It charges 75 bps in fees.

World Fuel Services Corporation INT

The Zacks Rank #2 company is a global energy management company. It belongs to a top-ranked (top 44%) Zacks industry.

Electronics and Appliance Stores

The segment saw sales gain of 0.4% in August, rebounding from a decline of 0.4% in July. VanEck Vectors Semiconductor ETF SMH should thus be under watch.

Texas Instruments Incorporated TXN

The Zacks Rank #2 company is a global semiconductor design and manufacturing company that develops analog ICs and embedded processors. The stock comes from a top-ranked Zacks sector (top 13%).

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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
 
VANECK-SEMICON (SMH): ETF Research Reports
 
US GAS FUND LP (UGA): ETF Research Reports
 
AMPL-ONLN RETL (IBUY): ETF Research Reports
 
World Fuel Services Corporation (INT) : Free Stock Analysis Report
 
Texas Instruments Incorporated (TXN) : Free Stock Analysis Report
 
PRO-L ONL/S STR (CLIX): ETF Research Reports
 
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