Consumer discretionary remains the top-performing U.S. equity sector as of Friday morning.
Shares of Ulta Beauty surged more than 6% after hours on Thursday as the beauty retailer’s quarterly report beat Wall Street estimates on the top and bottom lines, CNBC reported. The stock is up over 11% as of mid-morning Friday.
Ulta Beauty (ULTA) posted adjusted first quarter earnings of $6.30 per share on revenue of $2.346 billion. Analysts had expected a profit of $4.46 per share on revenue of $2.122 billion, according to Refinitiv. The company also issued better-than-expected forward guidance for the full year.
Shares of Dollar Tree (DLTR) and Dollar General (DG) surged on Thursday, lifting retail and consumer sector-related ETFs after the discount variety store chain revealed better-than-expected profits, VettaFi reported.
Dollar General’s earnings beat Wall Street’s muted expectations, with sales more or less flat for the quarter that ended April year-over-year, compared to analyst expectations of a 1.2% decline, the Wall Street Journal reported. Dollar Tree saw same-store sales growth of 4.4%, and net profit also climbed 43.2%, mostly due to the new price points at the Dollar Tree chain.
Dollar Tree-owned Family Dollar saw comparable-store sales of discretionary items decline 14.7%, but its sales of consumables increased 1.2%.
A fund to consider to gain exposure to the rebounding consumer discretionary sector is the Invesco S&P 500 Equal Weight Consumer Discretionary ETF (RCD), which offers meaningful exposure to Dollar Tree, Dollar General, and Ulta Beauty, among many other names.
This ETF offers exposure to the consumer discretionary sector of the domestic economy, making it one option available to investors implementing sector rotation strategies or looking to tilt exposure towards a high beta industry, according to VettaFi.
RCD is linked to an equal-weighted index, meaning that component companies receive approximately equal allocations. That results in exposure that is considerably more balanced than other funds available to investors, according to VettaFi.
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