Online Holiday Shopping Hit Records: ETFs to Win & Lose

After almost round-the-year coronavirus-induced fear, the Holiday Season has now officially set in. Consumers have started stacking up their shopping carts. Over the last few years, online sales have gained precedence. The coronavirus outbreak has raised the appeal of the space even more as it has less to do with human contact. So, one can imagine the likelihood of exponential gains in ecommerce stocks and ETFs this year.

Consumers shelled out about $9 billion (a new record) on the web on Black Friday, up 21.6% year over year, according to data from Adobe Analytics (which tracks website transactions from 80 of the top 100 U.S. online retailers), as quoted on CNBC. As a result, Black Friday 2020 came across as the second-largest online spending day in history in the United States, behind Cyber Monday last year, Adobe indicated.

Cyber Monday 2020 is also expected to turn out the biggest digital sales day in history in the United States. Spending should be between $10.8 billion and $12.7 billion, indicating year-over-year growth of 15% to 35%. Thanksgiving Day online sales also hit a record $5.1 billion, up 21.5% from last year, per Adobe, as quoted on CNBC.

About 50% of the purchases were made on a smartphone, according to Adobe. Analytics from Shopify, which tracks activity across more than 1 million merchants using its e-commerce platform, indicate that the average cart price globally was $86.80 compared with $90.40 in the United States (read: ETF Areas to Gain From the Holiday Shopping Season).

In contrast, in-store traffic on Black Friday slumped 52.1% year over year, according to preliminary data from Sensormatic Solutions, as quoted on CNBC.Several malls looked pale with almost empty parking lots during the early hours of the Black Friday morning.

What Were the Hot Buys?

“New consoles, phones, smart devices and TVs that are traditional Black Friday purchases are sharing online shopping cart space this year with unorthodox Black Friday purchases such as groceries, clothes and alcohol, that would previously have been purchased in-store,” said Taylor Schreiner, a director at Adobe Digital Insights, as quoted on CNBC.

Toys and personal care products were among the winning categories of this year shopping, according to Adobe, as quoted on CNBC. “Online spending on toys shot up 294% and rose 278% on personal care products compared with October daily averages. Sales of office supplies and bedding grew by 114% and 109%, respectively.”

ETFs to Win

ProShares Online Retail ETF ONLN

The underlying ProShares Online Retail Index is a specialized retail index that tracks retailers which principally sell online or through other non-store channels. The fund charges 58 bps in fees.

ProShares Long Online/Short Stores ETF CLIX

The underlying index consists of long positions in online retailers, included in the ProShares Online Retail Index, and short positions in the bricks and mortar retailers included in the Solactive-ProShares Bricks and Mortar Retail Store Index. The fund charges 65 bps in fees (see all long/short ETFs here).

Consumer Discretionary Select Sector SPDR Fund XLY

Consumers have been spending ontheir homes throughout the pandemic as the work-from-home trend led them to do so. Since Home Depot (HD) has an online presence and posted a 24.6% increase in comps in the third quarter from the year-ago period, Home Depot-heavy ETFs like XLY could be good bets.

Technology Select Sector SPDR Fund XLK

Microsoft’s latest consoles — the Xbox Series X and Xbox Series S — were launched a few weeks ago. So, this holiday season should see solid demand for new consoles. This why investors can bet on Microsoft-heavy ETFs like XLK.

ETF in a Tough Spot

iShares Cohen & Steers REIT ETF ICF

Rise in rates and still-bleak conditions in malls may put real estate companies in a tough spot. Mall-based REITs are thus set to suffer from the emerging online trend.  Before the pandemic hit, mall-based REITs were already in trouble and now the pandemic is worsened the matter, as quoted in a Forbes article. The largest U.S. mall REIT, Simon Property Group (SPG) has considerable weight in ICF.

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Technology Select Sector SPDR ETF (XLK): ETF Research Reports
iShares Cohen & Steers REIT ETF (ICF): ETF Research Reports
Consumer Discretionary Select Sector SPDR ETF (XLY): ETF Research Reports
ProShares Long OnlineShort Stores ETF (CLIX): ETF Research Reports
ProShares Online Retail ETF (ONLN): ETF Research Reports
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