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March Retail Sales Sparkles: Industry ETFs & Stocks to Win

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In March 2021, U.S. retail sales recorded the best gains in 10 months. Sales surged 9.8% sequentially, following a downwardly revised 2.7% decline in the previous month and easily beating market forecasts of a 5.9% increase. The $1,400 checks sent to consumers from mid-March, and improvement in the weather after winter storms in Texas and some other parts of the South region in February led to this gain.

Consumer spending makes up about 70% of U.S. economic activity. Thus, any massive jump in it will likely brighten the economic growth picture. Below we highlight a few areas and the related ETFs that benefited the most.

Clothing

Many mall-based clothing stores were closed amid lockdowns last year. So, pent-up demand boosted spending in this segment. Apparel and accessories sales skyrocketed 18.3% sequentially in the month and 101.1% year over year.

Apparel Retail takes about 19.3% of the fund SPDR S&P Retail ETF (XRT. The fund is thus well-positioned to benefit from the trend.

For single-stock selection, Zacks Rank #2 (Buy) Buckle Inc. BKE and Zacks Rank #1 (Strong Buy) Levi Strauss & Co. (LEVI) appear as nice bets here.

Electronics and Appliances

Sales of this category surged 10.5% sequentially. Year over year, sales were up 28.5%.  Consumers’ interest in buying electronics products should keep demand for semiconductors higher and put VanEck Vectors Semiconductor ETF (SMHin a better position.

On the equity front, Zacks Rank #3 (Hold) Systemax Inc. SYX appears a good bet. The company is a direct marketer of brand name and private label products.

Books, Music, Hobby, Gardening & Sporting Goods

The segment sporting goods, hobby, musical instrument, & book stores saw a surge in sales by 23.5% sequentially. Moreover, the segment’s sales were 73.5% higher year over year.

Building material & garden equipment & supplies dealerstoo witnessed a sequential sales surge of 12.1% in the month. Year over year, sales shot up 29.4%.

Such trends bode well for all retail and consumer discretionary ETFs like XRT, XLY and RTH. In this regard, investors can place a bet on Central Garden & Pet Co. CENT, which looks to strengthen its position as one of the leading U.S. companies in the pet supplies and lawn and garden supplies space. It has a Zacks Rank #1.

Restaurants

Sales in food services and drinking places saw a sales increase of 13.4% in March. Sales were up 36% year over year. A few restaurant stocks have exposure to Invesco Dynamic Leisure and Entertainment ETF PEJ, so the fund stands to benefit.

As far as stocks are concerned, investors can bet on Zacks Rank #1 Jack In The Box Inc. (JACK).

Motor Vehicle & Parts Dealers

Sales jumped 15.1% sequentially. Year over year, sales were up 71.1%. Auto ETF First Trust NASDAQ Global Auto ETF CARZ is designed to track the performance of the largest and most-liquid companies engaged in manufacturing of automobiles (read: U.S. Inflation Hits More Than 2-Year High: ETFs & Stocks to Win).

Investors can also bet on Zacks Rank #3 AutoZone Inc. (AZO). The company is one of the leading specialty retailers and distributors of automotive replacement parts and accessories in the United States.

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Jack In The Box Inc. (JACK) : Free Stock Analysis Report
 
SPDR S&P Retail ETF (XRT): ETF Research Reports
 
VanEck Vectors Semiconductor ETF (SMH): ETF Research Reports
 
Invesco Dynamic Leisure and Entertainment ETF (PEJ): ETF Research Reports
 
Levi Strauss & Co. (LEVI) : Free Stock Analysis Report
 
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