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ETFs & Stocks to Defy Weak September Retail Sales

Sanghamitra Saha

Retail sales in the United States dropped 0.3% sequentially in September 2019, after an upwardly revised 0.6% uptick in August. Sales also lagged market expectations of a 0.3% increase. It was the first and largest slump in retail sales since February, mainly owing to lower dollar value sales of motor vehicles, building materials, hobbies and online purchases.

About seven out of 13 major retail categories exhibited sequential declines. Compared to last September, retail sales grew 4.1%. However, data for August was revised up to show retail sales gaining 0.6% instead of 0.4% as previously reported.

The U.S. economy is in a complicated state with the 15-month-long trade war with China, which has soured business sentiment and manufacturing activity. The pain has probably been creeping into the retail space now.

Though it is too early to comment on the emerging trend, investors can bet on stocks and ETFs that have outdone even during the September retail slide. 

Apparel

Sales at clothing stores grew 1.3% versus 0.7% decline in August.

SPDR S&P Retail ETF XRT

The underlying S&P Retail Select Industry Index represents the retail sub-industry portion of the S&P TMI. Apparel Retail takes about one-fourth of the fund (read: Consumer ETFs: Bull Market Winners With Room to Run in 2019).

Buckle Inc. BKE

This Zacks Rank #1 company is a leading retailer of medium to better-priced casual apparel, footwear and accessories for young men and women. It comes from a top-ranked Zacks industry (top 20%).

Restaurants

Receipts at restaurants and bars grew 0.2%, following a 0.1% uptick in the prior month.

Invesco Dynamic Food & Beverage ETF PBJ

The underlying Dynamic Food & Beverage Intellidex Index is comprised of stocks of 30 U.S. food and beverage companies. These are companies that are principally engaged in the manufacture, sale or distribution of food and beverage products, agricultural products and products related to the development of food technologies.

Brinker International Inc. EAT

The Zacks Rank #2 (Buy) company primarily owns, operates, develops and franchises various restaurants under Chili’s Grill & Bar (Chili’s) and Maggiano’s Little Italy (Maggiano’s) brands. It comes from a top-ranked Zacks sector (top 25%).

Health and Personal Care Stores

Sales at health & personal care grew 0.6%, after an expansion of 0.7% in August.

The Obesity ETF SLIM

The underlying Solactive Obesity Index tracks the performance of global companies focusing on obesity-related diseases, weight-loss programs, weight-loss supplements and plus-sized apparel.

Avon Products Inc. AVP

The Zacks Rank #2 company is a leading global beauty company. It belongs to a top-ranked Zacks industry (top 4%).

Miscellaneous Store Retailers

VanEck Vectors Retail ETF RTH

The underlying MVIS US Listed Retail 25 Index tracks the overall performance of companies involved in retail distribution, wholesalers, online, direct mail and TV retailers, multi-line retailers, specialty retailers and food and other staples retailers.

The Michaels Companies, Inc. MIK

The Zacks Rank #2 company’s stores offer stock-keeping units (SKUs) in arts, crafts, floral, framing, home decor and seasonal merchandise, and do-it-yourself home decorator. It comes from a top-ranked Zacks industry (top 33%). Since sales rose at furniture stores (0.6% versus a flat reading), the stock should benefit from the trend.

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Avon Products, Inc. (AVP) : Free Stock Analysis Report
 
Invesco Dynamic Food & Beverage ETF (PBJ): ETF Research Reports
 
VanEck Vectors Retail ETF (RTH): ETF Research Reports
 
SPDR S&P Retail ETF (XRT): ETF Research Reports
 
Buckle, Inc. (The) (BKE) : Free Stock Analysis Report
 
Brinker International, Inc. (EAT) : Free Stock Analysis Report
 
The Michaels Companies, Inc. (MIK) : Free Stock Analysis Report
 
The Obesity ETF (SLIM): ETF Research Reports
 
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