The U.S. retail sales edged up 0.1% sequentially in April after an upwardly revised 1.7% surge in March, compared with the expectation of economists polled by Reuters to remain unchanged after a previously reported 1.5% jump in March.
The increase in March was partly driven by consumers advancing their purchases of items like automobiles in anticipation of U.S. President Donald Trump’s tariff announcement on April 2.
Biggest increases in April were seen in sales at food services and drinking places (1.2%), building material and garden equipment supplies dealers (0.8%), furniture (0.3%) and electronics and appliances stores (0.3%).
Meanwhile, sales excluding food services, auto dealers, building materials stores and gasoline stations, which are used to calculate GDP, were down 0.2%, below an upwardly revised 0.5% gain in March and forecasts of a 0.3% rise.
Below we highlight a few areas and the related ETFs & stocks that may benefit handsomely from the retail sales.
Winning Areas
Food Services and Drinking Places
Sales at food services and drinking places gained 1.2% sequentially in April and 7.8% year over year.
AdvisorShares Restaurant ETF EATZ – The AdvisorShares Restaurant ETF is an actively managed exchange-traded fund that seeks to achieve its investment objective by investing at least 80% of its net assets in securities of companies that derive at least 50% of their net revenue from the restaurant business. The fund charges 99 bps in fees.
BJ's Restaurants BJRI – BJ’s Restaurants owns and operates a chain of high-end casual dining restaurants in the United States. The stock has a Zacks Rank #1 (Strong Buy).
Building Material & Garden Equipment & Supplies Dealers
The segment Building Material & Garden Equipment & Supplies Dealers saw a 0.8% sequential gain in sales. The segment’s sales were 3.2% higher year over year.
As far as the ETF route is concerned, broad-based retail ETFs like Consumer Discretionary Select Sector SPDR ETF XLY and VanEck Retail ETF RTH should fit the bill.
Vulcan Materials VMC – Vulcan Materials Company operates primarily in the United States as the nation's largest supplier of construction aggregates (primarily crushed stone, sand and gravel) and a major producer of aggregates-intensive downstream products like asphalt mix and ready-mixed concrete. The stock has a Zacks Rank #2 (Buy).
Electronics & Appliance Stores
Sales gained 0.3% sequentially in April and 0.1% year over year. Rise in electronics sales should boost semiconductor funds and stocks.
VanEck Vectors Semiconductor ETF SMH – The underlying MVIS US Listed Semiconductor 25 Index tracks the overall performance of companies involved in semiconductor production and equipment. The fund charges 35 bps in fees.
Universal Electronics UEIC – As far as stocks are concerned, investors can take a look at UEIC. It is the worldwide leader in universal control and sensing technologies for the smart home. The fund has a Zacks Rank #3.
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BJ's Restaurants, Inc. (BJRI) : Free Stock Analysis Report
Vulcan Materials Company (VMC) : Free Stock Analysis Report
Universal Electronics Inc. (UEIC) : Free Stock Analysis Report
VanEck Retail ETF (RTH): ETF Research Reports
VanEck Semiconductor ETF (SMH): ETF Research Reports
Consumer Discretionary Select Sector SPDR ETF (XLY): ETF Research Reports
AdvisorShares Restaurant ETF (EATZ): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).
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