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Boo! 2 ETFs That Could Offer A Taste Of The Halloween Retail Spending Spike

Published 2021-10-29, 12:59 a/m

Autumn months typically mean increased consumer spending in the US, which puts retail stocks in the limelight. Specifically, the end of October sees many Americans shop for Halloween.

According to metrics released by the National Retail Foundation (NRF):

“Consumer spending on Halloween-related items is expected to reach an all-time high of $10.14 billion, up from $8.05 billion in 2020.”

Therefore, we introduces two exchange-traded funds (ETFs) that could benefit from the increased spending levels this Halloween season.

1. Amplify Online Retail ETF

  • Current Price: $111.09
  • 52-Week Range: $88.07 - $141.00
  • Dividend Yield: 0.55%
  • Expense Ratio: 0.65% per year

According to a recent report by the US Census Bureau:

“The estimate of US. retail e-commerce sales for the second quarter of 2021 … was $222.5 billion, an increase of 3.3% (±0.7%) from the first quarter of 2021.”

By 2024, global e-commerce sales are expected to reach almost $6.4 trillion, up from almost $2.3 trillion in 2020. The Amplify Online Retail ETF (NYSE:IBUY) invests in businesses that generate most of their revenue from online sales and benefit from e-commerce growth worldwide. The fund began trading in April 2016.

IBUY Weekly Chart.

IBUY, which has 71 holdings, tracks the returns of the EQM Online Retail Index. The fund’s top 10 holdings account for around 26% of its net assets, which stand at $885 million.

Almost three-quarters of the stocks in the ETF are US-based. The rest come from Germany (5.5%), China (4.6%), the UK (3.95) and Japan (2.3%). In terms of the sub-sectoral breakdown, traditional retail comprises the highest portion, with 53.6%; followed by marketplace (36.6%) and travel (9.8%).

Online marketplace Etsy (NASDAQ:ETSY); online fashion retailer Revolve (NYSE:RVLV); food ordering platform DoorDash (NYSE:DASH); freelance talent platform Upwork (NASDAQ:UPWK); and Shutterstock (NYSE:SSTK), which provides photographs, videos, illustrations and visual communications editing tools, lead the names on the roster.

Over the past year, the fund is up about 13.9%, but down 4.3% year-to-date. During the pandemic, it benefitted from the strong performance of platform shares and e-commerce stocks as well as payment processors. As a result, IBUY saw a record high in mid-February, but has come under pressure since then. Potential investors could find value around these levels.

2. First Trust Nasdaq Retail ETF

  • Current Price: $35.95
  • 52-Week Range: $25.66 - $36.72
  • Dividend Yield: 0.64%
  • Expense Ratio: 0.60% per year

The First Trust Nasdaq Retail ETF (NASDAQ:FTXD) invests in the 50 retail securities in the NASDAQ US Smart Retail Index, which is reconstituted annually and rebalanced quarterly. The criteria used to choose stocks for the ETF include:

• Volatility – a stock’s trailing 12-month price fluctuation;

• Value – as expressed by cash flow to price ratio;

• Growth – the stock price appreciation over the past 12 months, assessed at regular intervals.

FTXD Weekly Chart.

FTXD was first listed in September 2016 and has around $2.13 million in assets. In other words, it's a small fund.

Stocks from the specialty retailers segment have the highest weighting, with 39.08%. Next come diversified retailers (26.33%), apparel retailers (8.50%), drug retailers (8.46%) and home improvement retailers (6.58%). The leading 10 names account for about 45% of the fund.

Video games and entertainment products retailer GameStop (NYSE:GME), which has also become one of the leading meme stocks of 2021; retail pharmacy chain CVS Health (NYSE:CVS); retailer of automotive replacement parts and accessories AutoZone (NYSE:AZO); retail giant Walmart (NYSE:WMT); and Kroger (NYSE:KR), which operates grocery and multi-department stores; lead the names in FTXD.

Over the past 12 months, the fund is up about 34.5% and also returned 26.1% so far in 2021. It hit a record high in June. The fund’s P/E and P/S ratios stand at 18.08x and 0.76x. Interested readers could consider buying the dips.

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