U.S. Markets open in 9 hrs 30 mins

Strong Holiday Retail Sales: 3 ETF & Stock Picks

Sanghamitra Saha
Marathon Petroleum's (MPC) Speedway (or Retail) division is likely to benefit from higher output.

The U.S. retail sector is in great shape. Sales increased 0.4% sequentially in December 2017, after an upwardly revised 0.9% rise in November, and met market expectations. On a year-over-year basis, retail sales rose 5.4% following 6% gains recorded in November. In 2017, retail sales grew 4.2% compared with 3.2% in 2016.

Out of the 13 key sectors, eight registered expansion last month. Notable improvement was noticed in the areas of gardening and building material stores, motor vehicle & parts dealers, food and beverage stores, furniture & home furniture stores, general merchandise stores and non-store retailers, as per tradingeconomics.

Super Upbeat Holiday Season

December fall in the midst of the holiday shopping season (NRF describes as November 1 through December 31) which turned out profitable in 2017. Retail sales during November and December grew 5.5% year over year to about $692 billion, as per the National Retail Federation.

The number breezed past NRF’s projection of an increase of between 3.6% and 4%. The 2017 holiday sales figure represented the largest jump since 2010 after the end of the Great Recession, when 5.2% year-over-year gains were realized. The season followed the three strongest monthly year-over-year gains for retail sales since fourth-quarter 2014.

Needless to say, a solid labor market, wage increases amid the prospect of tax cuts, an upbeat stock market and multi-year high consumer confidence made this surge in retail sales possible.

Below we recommend a few ETFs & stocks that are likely to be the prime beneficiaries of the retail sales improvement in recent months.

Building Materials and Supplies

The sales in the gardening and building material stores increased 1.2% in December versus 0.5% in November. And, building materials and supplies stores saw 8.1% unadjusted year-over-year sales increment in during November and December.

PowerShares Dynamic Building & Construction Portfolio PKB

The fund comprises stocks of U.S. building and construction companies. It has a Zacks Rank #2 (Buy) (read: 3 Sector ETFs & Stocks to Sizzle Despite Downbeat Job Data).

Fastenal Company FAST

The Zacks Rank #2 company, together with its subsidiaries, engages in the wholesale distribution of industrial and construction supplies in the United States, Canada and internationally.

Food & Beverage

F&B stores saw sales increase of 0.5% in December versus 0.4% in November. Food services & drinking places was also a gainer (0.7% vs. 0.5%). This positions the following fund and stock better.

PowerShares Dynamic Food & Beverage Portfolio PBJ

The fund comprises 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 new food technologies (read: November Retail Sales Steady: 3 ETF & Stock Picks).

United Natural Foods Inc. UNFI

The company together with its subsidiaries, distributes natural, organic, and specialty foods and non-food products in the United States and Canada. The fund has a Zacks Rank #2.

Health & Personal Care Stores

Health and personal care stores grew 2.2% unadjusted year over year in the holiday season. And the segment saw a sales increase of 0.4% against the same clip as that of November.

The Obesity ETF SLIM

The fund tracks the performance of companies globally positioned to profit from servicing the obese, including biotechnology, pharmaceutical, health care & medical device companies.

Halyard Health Inc. HYH

This is a medical technology company with a Zacks Rank #2.

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Fastenal Company (FAST) : Free Stock Analysis Report
 
PWRSH-DYN BLDG (PKB): ETF Research Reports
 
PWRSH-DYN FD&BV (PBJ): ETF Research Reports
 
United Natural Foods, Inc. (UNFI) : Free Stock Analysis Report
 
Halyard Health, Inc. (HYH) : Free Stock Analysis Report
 
OBESITY ETF (SLIM): ETF Research Reports
 
To read this article on Zacks.com click here.
 
Zacks Investment Research
 
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report