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Will Wal-Mart (WMT) ETFs Outdo Amazon (AMZN) in Last-Minute Shopping?

Zacks Investment Research

The holiday season has seen a smashing start with retailers, especially online, enjoying strong sales on long promotions, heavy discounts and free shipping. This is especially true as online sales have climbed 16.8% from the last holiday season to $50 billion so far this time (November 1-27) per Adobe Insights.

Will Wal-Mart (WMT) ETFs Outdo Amazon (AMZN) in Last-Minute Shopping?

Source: Mike Mozart via Flickr

Notably, retailers raked in a record $13.03 billion in online sales from Nov 23 through 26, up 14.4% year over year. Adobe expects 2017 be the first-ever holiday season to break $100 billion in online sales.

Amazon.com, Inc. (NASDAQ:AMZN) is ruling so far this holiday season. According to the latest data from Slice Intelligence, Amazon alone represented 30.9% of all U.S. online spending over a record Cyber Weekend while Wal-Mart Stores Inc (NYSE:WMT) accounted for just 4.1% market share.

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What’s More Happening?

To throw stiff competition to Amazon in the final weeks before Christmas, Wal-Mart has stepped up its efforts to make a bigger push into the online space. The mega retailer plans to add more items than ever before for same-day pickup in stores on Walmart.com.

With increased offerings, the company foresees demand for same-day orders to double during the final two weeks of the holiday shopping season. As such, customers can shop for items noted “Free Pickup Today” on Walmart.com until 4 p.m. on Dec 23, and can pick up those products from the company’s stores until 6 pm on Christmas Eve. This service will make Wal-Mart superior to Amazon, which has never come up with such a plan, heading into Christmas.

Additionally, the big-box retailer came up with another enticing plan, similar to Amazon, of filling some online order boxes with unloaded gift cards. These cards will allow customers to make another gift purchase by adding funds to it, thereby providing a boost to the company’s sales. These offers come in addition to the free two-day shipping policy on any purchase over $35.

In a similar move, Amazon has also expanded its free same-day and one-day shipping policy for Prime members through Dec 24. Non-Prime members would also be eligible for free delivery on orders over $35, either the same day or the next.

The e-commerce behemoth is clearly enjoying the price leadership this holiday season as it kicked off its massive sale on Nov 11 and will continue it till midnight Dec 22. Amazon is offering new “Deals of the Day” and luring customers with “Lightning Deals” on limited stock.

Amazon Versus Walmart

Amazon currently has a Zacks Rank #3 (Hold) and a Momentum Style Score of B. It falls in a dismal industry ranking, having a Zacks Rank in the bottom 33%, suggesting some rough trading for the stock. The stock saw no earnings estimate revision over the past 30 days for the holiday quarter.

On the other hand, Wal-Mart carries a Zacks Rank #2 (Buy) and a Momentum Style Score of A. It also boasts a solid Industry Rank in the top 25% and saw solid earnings estimate revision of three cents for the holiday quarter over the past 30 days, suggesting significant upside for the coming days.

If we go be performance, Wal-Mart is outperforming Amazon, having returned 7.3% over the past one month compared to gains of 2.4% for the latter.


ETFs to Bet On

Based on the above discussion, Wal-Mart seems to be taking some sheen away from the online giant in the final days heading into Christmas. As such, investors could bet on WMT in a basket form with iShares Edge MSCI Multifactor Consumer Staples ETF (BATS:CNSF) and Fidelity MSCI Consumer Staples Index ETF (NYSEARCA:FSTA). Wal-Mart accounts for 9.5% share in CNSF and 7.1% share in FSTA. These funds have gained more than 5% each over the past one month but carry an unfavorable Zacks Rank #5 (Strong Sell).

Meanwhile, investors could bet on Amazon with the help of Consumer Discretionary Select Sector SPDR Fund (NYSEARCA:XLY) and AdvisorShares New Tech and Media ETF (NYSEARCA:FNG). AMZN occupies the top position in both ETFs with 16.8% and 14.8% share, respectively. XLY gained 5.7% while FNG shed 3.1% in the last one-month period. XLY has a Zacks Rank #3.

Investors seeking to invest in both companies at the same time could look at VanEck Vectors Retail ETF (MUTF:RTH) and First Trust Nasdaq Retail ETF (NASDAQ:FTXD). Amazon and Wal-Mart are the top and third firms in the RTH portfolio, accounting for 18.1% and 6.9% of assets, respectively. Meanwhile, WMT takes the top spot at 8.8% in FTXD and Amazon occupies the fourth position at 6.9%. These funds are up 10% and 8.3%, respectively. Both ETFs have a Zacks Rank #3.

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