It’s the merriest month of the year for the retail sector, courtesy of the holiday fervor and encouraging industry fundamentals. The frenzy of heavy discounts, promotions and free shipping are driving strong sales. Notably, the holiday season contributes about 25-40% to the sector’s annual sales.
Per the latest data from National Retail Federation (NRF), more than 174 million Americans shopped during the Thanksgiving weekend (from Thanksgiving through Cyber Monday), much higher than the pre-holiday prediction of 164 million consumers. The group expects holiday sales through November and December to rise as much as 4% this year to $682 billion.
The rise came on the back of economic growth, higher consumer confidence and low unemployment. The economy is expanding at the fastest clip in three years with best back-to-back quarters of at least 3% GDP growth. Unemployment dropped to the lowest level since December 2000 to 4.1%. Further, consumer confidence scaled the highest level in 17 years.
Moreover, the deluge of better-than-expected earnings reports from retailers as well as their solid full-year outlook added to the strength.
Given this, investors might want to tap the space with the top-performing retail ETFs and stocks of this month. We have highlighted four funds and stocks that are poised to perform well in the final month of the year.
Best ETFs
SPDR S&P Retail ETF (XRT – Free Report)
This product tracks the S&P Retail Select Industry Index, holding 87 securities in its basket with none accounting for more than 1.7%. The fund has amassed $534 million in its asset base and charges 35 bps in annual fees. Volume is extremely solid, exchanging nearly 4.3 million shares in hand a day on average. The fund has gained nearly 11.3% in November and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
VanEck Vectors Retail ETF (RTH – Free Report)
This fund provides exposure to the 26 largest retail firms by tracking the MVIS US Listed Retail 25 Index. It is highly concentrated on the top firm, Amazon (AMZN), at 18.6% while other firms hold no more than 7.6% share. The product has amassed $58.7 million in its asset base and trades in light average daily volume of 12,000 shares. It charges 35 bps in annual fees and has gained 8.6% this month. RTH has a Zacks ETF Rank #3 with a Medium risk outlook.
