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Retail Sales Rebound: 4 ETF & Stock Picks

Sanghamitra Saha
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The boons of Hurricane Harvey started being felt slowly as evident from the biggest increase in retail sales in the month of September since March 2015. Sales increased 1.6% sequentially in September 2017, slightly below market expectations of a 1.7% but rebounding from a 0.1% decline in August. On a year-over-year basis, retail sales rose 4.4% following 3.2% gains recorded in August.

Some analysts expected this rebound following subdued sales in the last two months. Hurricane Harvey flooded Texas at August-end and Irma demolished Florida in early September. So, purchase of new cars, higher replacement demand and a pickup in economic activity was understandable post hurricanes (read: ETF & Stocks to Buy on Rebounding September Auto Sales).

Out of the 13 key sectors, eight registered expansion last month. Below we recommend a few ETFs & stocks that are likely to be the prime beneficiaries of this retail sales improvement.

Auto

A rebound in sales among auto dealerships was noticeable in September, with a 3.6% increase following a 1.5% rise in August. Hurricane Harvey dented thousands of new vehicles that were in dealership lots, according to an analysis from Edmunds. Those new cars and trucks probably were ‘scrapped,’ if we go by the CEO of AutoNation.

The car-shopping website estimates that Harvey affected 366,000 new vehicles across Texas. So, repurchase of cars will gain traction over the medium term on higher replacement demand for damaged vehicles.  

AutoNation’s CEO also emphasized that “there will be a substantial snapback either in the fourth quarter or the first quarter of next year.” First Trust NASDAQ Global Auto Index Fund CARZ (CARZ) can thus gain ahead (read: Harvey: Pain or Gain Ahead for Auto Stocks and ETFs?)

Investors can also have a look at Zacks Rank #1 (Strong Buy) Dana Inc. DAN. The company is a provider of technology driveline, sealing and thermal-management products. The Zacks Industry Rank of the stock is in the top 9% and it has a VGM (Value, Growth, Momentum) Score of A.

Gasoline Stations

Sales rose 5.8% in gasoline stations. Harvey has thumped a quarter of oil production from the Gulf of Mexico and over 10% of U.S. refining capacity. Several refineries have shut down their operations. So, demand for the finished product, gasoline, rose (read: Gasoline ETF Jumps on Storm Harvey).

This benefited the fund United States Gasoline Fund UGA. Coming to stocks, Par Pacific Holdings Inc. PARR can be a good pick. The Zacks Industry Rank is in the top 4%. The company's operating segment consists of refining, retail and logistics. The stock has a Zacks Rank #1 and a VGM Score of B.

Restaurants

Sales at restaurants and bars increased 0.8%, the highest since January. This may benefit restaurant ETF USCF Restaurant Leaders MENU. Investors can also take a look at Zacks Rank #1 Brinker International Inc. EAT. The VGM Score of the stock is B.

Construction

Sales at building materials’ merchants rose 2.1% (0.6% in August), marking the biggest increase since February. After all, the need for reconstruction of infrastructure and remodeling of houses was higher post hurricanes (read: 5 ETFs to Buy on 13-Year High Manufacturing Activity).

This should benefit PowerShares Dynamic Building & Construction ETF PKB. As far as stock picking is concerned, Zacks Rank #1 Primoris Services Corporation PRIM can prove to be good. The stock has a VGM Score of B. 

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Dana Incorporated (DAN) : Free Stock Analysis Report
 
Primoris Services Corporation (PRIM) : Free Stock Analysis Report
 
US GAS FUND LP (UGA): ETF Research Reports
 
PWRSH-DYN BLDG (PKB): ETF Research Reports
 
FT-NDQ GL AUTO (CARZ): ETF Research Reports
 
Par Pacific Holdings, Inc. (PARR) : Free Stock Analysis Report
 
Brinker International, Inc. (EAT) : Free Stock Analysis Report
 
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