ETFs & Stocks to Win Despite Slowing November Retail Sales

U.S. retail sales gained 0.3% sequentially in November 2021, following a 1.8% rise in October and well below market expectations of 0.8%, as shoppers cut back on their discretionary spending amid the fastest inflation in decades. Concerns related to product shortages owing to prolonged supply chain disruptions led consumers to kick start their holiday shopping well before Thanksgiving Day. As a result, retail sales figures for October were revised up slightly.

Per Wall Street Journal, November sales fell victim of tough comparison with October. Early holiday spending in October from consumers, including at e-commerce players such as Amazon.com (NASDAQ:AMZN), led to no growth in sales in e-commerce compared with October. The stores that sell gift items also witnessed a massive decline in November sales (down 4.6%) after seeing healthy growth in October. These include electronics and appliance stores and department stores.

Below we highlight a few areas and the related ETFs that held their heads high in November.

Clothing

Apparel and accessories sales continued to grow having risen 0.5% sequentially in the month and 34.8% year over year.

Apparel Retail takes about 20% of the fund SPDR S&P Retail ETF XRT. The fund is thus well-positioned to benefit from the trend.

For single-stock selection, Zacks Rank #1 (Strong Buy) Buckle Inc. (NYSE:BKE) and Zacks Rank #1 Boot Barn (NYSE:BOOT) BOOT appear as nice bets here.

Books, Music, Hobby, Gardening & Sporting Goods

The segment sporting goods, hobby, musical instrument, & book stores saw a 1.3% sequential surge in sales. Moreover, the segment’s sales were 20% higher year over year. Zacks Rank #3 (Hold) Hibbett Sports (NASDAQ:HIBB) and Foot Locker (NYSE:FL) FL may win from this trend.

Building material & garden equipment & supplies dealers too witnessed a sequential sales surge of 0.7%. Year over year, sales shot up 9.3%. Such trends bode well for all retail and consumer discretionary ETFs like XRT, Consumer Discretionary Select Sector SPDR Fund XLY and VanEck Vectors Retail ETF (RTH).

In this regard, investors can place a bet on Central Garden & Pet Co. CENT, which looks to strengthen its position as one of the leading U.S. companies in the pet supplies and lawn and garden supplies space. It has a Zacks Rank #2 (Buy).

Restaurants

Sales in food services and drinking places saw a sales increase of 1% in November. Sales were up 37.4% year over year. Restaurant stocks have exposure to AdvisorShares Restaurant ETF EATZ, so the fund stands to benefit. As far as stocks are concerned, investors can bet on Zacks Rank #2 McDonald's MCD.

Food & Beverage Places

Sales of this category gained 1.3% sequentially in November and 8.6% year over year. Within the group, grocery stores recorded a 0.9% sequential gain in the month and 8.7% year-over-year surge.

The Kroger (NYSE:KR) Co. KR – Zacks Rank #3 company operates in the thin-margin grocery industry. Invesco Dynamic Food & Beverage ETF (PBJ) comprises stocks of 30 U.S. food and beverage companies. These are 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. Consumer Staples Select Sector SPDR ETF (NYSE:XLP) (XLP) may emerge as a beneficiary of this trend.

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