Holiday Sales Strongest In Six Years: ETFs Set To Surge

Amid the stock market swoon, this holiday season has emerged as the best in six years with an e-commerce bonanza and surge in last-minute shopping. Total U.S. retail sales, excluding automobiles, rose 5.1% year over year between Nov 1 and Dec 24 per the MasterCard Advisors' SpendingPulse. Overall, U.S. consumers spent more than $850 billion this holiday season.

Notably, e-commerce sales surged 18.3% year over year between Nov 1 and Dec 19 boosted by 16.5% growth in apparel sales. Online sales at department stores, electronics and jewelry were also robust, rising between 7-10%. Meanwhile, in-store sales grew 4.3% in the same time period, thanks to an accelerating economy, rising consumer confidence, and higher spending. The American economy is on track this year to expand at the fastest pace in 13 years, thanks to robust job creation, strong GDP growth, a 50-year low unemployment rate, and solid wage gains.

The growth rates are better than what the National Retail Federation (NRF) and Adobe had predicted. For November–December period, NRF had projected holiday sales (excluding autos, gas, and restaurant) to grow 4.3%-4.8%, down from last year’s growth rate of 5.3% but higher than the five-year average of 3.9%. Adobe had forecast an increase of 14.8% in e-commerce sales this holiday season.

Given the solid holiday sales data, many corners of the consumer space including Internet are expected to see the surge as and when the market rebounds. Below, we have highlighted some ETFs that could be excellent picks given the strongest holiday season in years. However, these are down over the past three-month period due to the worst market sell-off.

SPDR S&P Retail ETF (XRT - Free Report)

This product tracks the S&P Retail Select Industry Index, holding 95 securities in its basket, with none accounting for more than 1.3%. The fund has amassed $399.9 million in its asset base and charges 35 bps in annual fees. Volume is extremely solid, exchanging nearly 7 million shares in hand a day on average. The fund has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.

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