With Thanksgiving in the rearview mirror the 2024 holiday shopping season is ramping up in earnest and as measured by the distance from Thanksgiving to Christmas — just 27 days — it’s the shortest a holiday shopping season can be.
This year’s shortened winter holiday shopping timeframe is like any other, in that there are investment implications, including some that are pertinent to investors considering exchange traded funds such as the Invesco NASDAQ Next Gen 100 ETF (QQQJ). QQQJ, which follows the Nasdaq Next Generation 100 Index, allocates 16.08% of its weight to consumer cyclical stocks, making that the ETF’s third-largest sector exposure.
Alone, that makes the Invesco fund a relevant play on the holiday shopping theme. That relevance is enhanced by expectations that some cost-conscious consumers could turn to small gifts over big-ticket items this year. Several of QQQJ’s e-commerce holdings could be beneficiaries of that trend.
Holiday Travel Could Be QQQJ Catalyst
Expectations for brisk holiday travel this year could be advantageous for QQQJ because two of its consumer discretionary holdings are travel booking firms and a pair of its industrial components are airlines.
“Within airlines, we’re expecting a strong holiday season for air travel based on encouraging TSA data. This lines up with continued strong demand for travel and live experiences,” noted Michelle Weaver, U.S. thematic and equity strategist at Morgan Stanley.
That quartet of stocks doesn’t include QQQJ’s holdings in two operators of Las Vegas Strip casino hotels — properties that could benefit from increased foot traffic following Christmas and leading up to New Year’s Eve. QQQJ’s travel-related exposures could prove important due to the aforementioned short time window between Thanksgiving and Christmas.
“So, this could affect e-commerce players with longer average delivery times. We’re cautious on consumer electronic sales this holiday season,” added Weaver. “Consumer hardware spending intentions remain negative as we near the holiday season. And then finally for toys, leisure products, and services, we’re cautiously optimistic that the holiday season could prove better than feared.”
Some QQQJ consumer cyclical holdings have exposure to the industries mentioned above, indicating that it would be beneficial if sales in those groups surprise to the upside. The good news is that the broader outlook for holiday shopping this year is positive and that could benefit QQQJ.
“So, all in all, the holidays are looking reasonably bright for many businesses, especially those with more exposure to the high-end consumer; but like consumers, we think that the results will vary by industry and by company,” Weaver concluded.
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