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A Spread of Top-Ranked ETFs for Thanksgiving and After

Sanghamitra Saha

We are just three days away from Thanksgiving Day, which kicks off holiday season. Americans join extended families and give thanks for the good things they have in life.

This year, the occasion must be merrier as savings on gas stations (thanks to still-cheap oil prices), an improving job market and a soaring equity market should lay a bountiful spread on the Thanksgiving table.

Thanksgiving Dinner Cheaper This Year

As per the American Farm Bureau Federation, the average cost of a Thanksgiving dinner for 10 people will come for around $49.87 this year, down 24 cents from the last year. On an inflation-adjusted basis, the cost of a Thanksgiving dinner dropped to “its lowest since 2010.” Prices for turkey, milk and pumpkin-pie mix witnessed a sharp fall.

Agreed, this deflationary food price trend hurt farmers, but should make the party merrier. The trend should last the entire holiday season. The National Retail Federation expects total holiday sales excluding autos, gas and restaurant to expand 3.6% to $655.8 billion, a little higher than the post-recession average of 3.4% since 2009.

Also, the International Council of Shopping Centers sees a 3.3% uptick in spending at physical stores against 2.2% gains in sales last year (read: 4 ETFs & Stocks to Treat You on Halloween and After).

Retail Buying on Thanksgiving

Many retailers in fact start offering Black Friday sales from Thanksgiving evening itself. Retailers like Wal-Mart WMT, J.C. Penney JCP, Best Buy BBY, Macy’s M, Target TGT and Kohl’s KSS will open their doors to customers on Thanksgiving evening. As per National Retail Federation, about 59% of Americans are expected to shop this Thanksgiving weekend.

Probably people do have a fetish for Thanksgiving shopping as indicated by a 32% surge in online shopping from 2011 to 2012. As per an article published on Investopedia, online orders booked on Thanksgiving Day again jumped 32% from 2013 to 2014. There is a forecast of an 11% jump in e-commerce sales this holiday season.

All in all, the time has come to feast on turkey and mashed potatoes and make the most of deals and discounts offered by retailers for Thanksgiving, Black Friday and Cyber Monday and carrying the euphoria til Christmas on greater purchasing power.

In any case, retail sales momentum is presently reassuring. Sales in October grew 0.8% last month sequentially, after an upwardly revised 1% rise in the earlier period and surpassed market expectations of 0.6% growth (read: Retail Sales Sustain Winning Momentum: ETF & Stock Bets).

Accelerating wage growth can be credited to greater consumer confidence. Notably, the country “extended its record private sector hiring streak in October as wage growth accelerated to its fastest pace since 2009,” as per ft.com.

As a result, the following consumer discretionary ETFs will be the greatest beneficiaries. These ETFs were sharply upgraded on the threshold of the holiday season as per the Zacks methodology (see all Consumer Discretionary ETFs here).

PowerShares Dynamic Leisure & Entertainment ETF PEJ – #5 (Strong Sell) to 2 (Buy)

VanEck Vectors Gaming ETF BJK – #5 to 2 (read: Should You Bet on Casino ETF with Decent Earnings?)

PowerShares S&P Small Cap Consumer Discretionary ETF PSCD – #4 (Sell) to 2

Guggenheim S&P 500 Equal Weight Consumer Discretionary ETF RCD – #4 to 2

VanEck Vectors Retail ETF RTH – #3 (Hold) to 1 (Strong Buy)

Fidelity MSCI Consumer Discretionary ETF FDIS – #3 to 1

Restaurant ETF BITE – #5 to 2 (read: BITE vs MENU : Will the War Whet Investors' Appetite?).

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VANECK-RETAIL (RTH): ETF Research Reports
PWRSH-DYN LE&EN (PEJ): ETF Research Reports
PWRSH-SP SC C D (PSCD): ETF Research Reports
GUGG-SP5 EW C D (RCD): ETF Research Reports
VANECK-GAMING (BJK): ETF Research Reports
FID-CON DIS (FDIS): ETF Research Reports
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