Consumers are feeling emboldened lately and, as a result, they’re opening up their wallets a little more. But many are feeling a little scarred by the effects of the slowdown, leaving the fate of retail exchange traded funds (ETFs) in question.
Recent economic data points to the fact that consumers have opened up their wallets a little bit, reports Leah Bourne of Forbes.com. According to a MasterCard Advisors’ SpendingPulse report, the luxury category saw an uptick of 15% in sales as compared to sales in February 2009. Popular among these purchases have been items such as a $13,000 Miss Viv bag by Roger Vivier, and a $25,000 diamond-encrusted pair of sunglasses by Sama. But has the market responded to the data? Looking at Claymore/Robb Report Global Luxury Index ETF (NYSE: ROB), it would seem so. [5 ETFs for the New Retail Climate.]
In a separate report, Will Ashworth of Investopedia analyzed the 31 retail stocks in the S&P500 to see where each was valued looking at four ratios: forward price-to-earnings, price-to-sales, price-to-book, and price-to-cash flow. By multiplying all four ratios together, he found the top five companies with low valuations, which were GameStop (NYSE: GME), AutoNation (NYSE: AN), Macy’s (NYSE: M), JC Penny (NYSE: JCP), and Best Buy (NYSE: BBY), in that order. Of these, only M is trading at its 52-week high. This makes sense considering that the analysis was done to find low-valued stocks. However, looking at ETFs that hold these companies, we see a slightly different picture. [Retail Spending Picks Up, But One Area Lags.]
- Retail HOLDRs Trust (NYSE: RTH): BBY is 3.8% of the fund
- SPDR S&P Retail (NYSE: XRT)
These funds are above their 200-day moving average and near their 52-week high. Whether there’s tremendous upside to retail ETFs is a matter of debate: on the one side, only 21% of the American population believes they will return to their spend-crazy ways; on the other, it’s human nature to have a short memory, even after a crisis like this one. [Retail ETFs Have Their Work Cut Out.]
For more information on retail, visit our retail category.
Sumin Kim contributed this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.