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U.S. Retail Sales Steady in July: ETFs & Stocks to Play

Sanghamitra Saha
Though rising yields have dampened the appeal for dividend investing, a niche corner of this space, comprising stocks that boast dividend growth, is still in vogue.

After gaining 0.2% in June, U.S. retail sales registered a 0.5% sequential rise in July. The reading surpassed analysts’ expectations of a 0.1% increase. Higher sales of motor vehicles and clothing mainly kept July retail sales data steady.

Barring automobiles, gasoline, building materials and food services, retail sales grew 0.5% in July, following a 0.1% decline in June. On a year-over-year basis, retail sales increased 6.4% in July compared with a 6.1% rise in June.

Eight out of 13 major retail categories exhibited a rise in sales in July from the previous month, as per tradingeconomics. Sales at motor vehicle & parts dealers, gasoline stations, apparel stores and online and mail-order retail trade were among the key drivers.

A solid labor market and higher take-home pay amid tax reductions probably drove Americans' ability to spend, helping them to tide over the sudden spike in fuel costs. Against this backdrop, we recommend a few ETFs and stocks that can be beneficiaries of July retail sales (read: 4 ETFs in Focus Post July Jobs Data).

Online Stores

Though brick-and-mortar retailers have been steady in recent times, the appeal of online retailing has been high. Sales at online and mail-order retail trade increased 0.8% (versus 0.7% in June). Amazon.com Inc’s “Prime Day” promotions are deemed to have boosted online sales, per analysts. Such consistency puts Amplify Online Retail ETF IBUY in focus. ProShares Long Online/Short Stores ETF CLIX also deserves a look.

Amazon.com Inc. AMZN

The Zacks Rank #1 (Strong Buy) company is in the retail sale of consumer products and subscriptions in North America and internationally. It comes from a top-ranked Zacks sector (top 31%).

Apparel

Sales at clothing & clothing accessories stores recoiled 1.3% in July from a 1.6% fall in June. In this regard, investors can take a look at SPDR S&P Retail ETF XRT,which invests about 23.85% of its weight inapparel.

The Buckle Inc. BKE

The Zacks Rank #1 company is a foremost retailer of medium to better-priced casual apparel, footwear and accessories for fashion-conscious young men and women. It hails from a top-ranked Zacks industry (top 22%).

Energy

Sales at gasoline stations rose 0.8% against 0.3% in June. Gasoline prices are on a tear lately. Inflation data also gives cues of that. The product’s price soared to the highest level early this month for the month of August since 2014, probably courtesy of Trump’s sanctions against Iran.

Investors thus can take a lookat US Commodity Funds United States Gasoline Fund LP UGA. The underlying index of the fund looks to reflect the changes in the price of gasoline. It charges 75 bps in fees (read: Oil ETFs: What You Need to Know).

World Fuel Services Corporation INT

The Zacks Rank #2 company is a global energy management company. It belongs to a top-ranked (top 4/8%) Zacks industry.

Restaurants

Restaurants and bars saw a sales gain of 1.3% in July, maintaining the winning momentum of Jun when sales rose 1.6%. Invesco Dynamic Food & Beverage ETF PBJ puts 7.60% of its weight in Restaurants.

BJ's Restaurants Inc. BJRI

The Zacks Rank #1 company owns and operates restaurants, located in the United States.

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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
 
SPDR-SP RET ETF (XRT): ETF Research Reports
 
US GAS FUND LP (UGA): ETF Research Reports
 
AMPL-ONLN RETL (IBUY): ETF Research Reports
 
PWRSH-DYN FD&BV (PBJ): ETF Research Reports
 
BJ's Restaurants, Inc. (BJRI) : Free Stock Analysis Report
 
PRO-L ONL/S STR (CLIX): ETF Research Reports
 
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