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2 ETF and Stock Takeaways From Back-to-School Shopping Season

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The back-to-school season, the shopping extravaganza between July and September that comes second to holiday shopping, is at its peak. Americans are estimated to spend $27.6 billion this time, per an article published on CNBC. Keeping this in mind, below we highlight a few patterns that have been established in this year’s back-to-school season.

Departmental Stores to Gain Upper Hand

Average spending on apparel, school supplies, electronic gadgets and more is likely to touch $510 per household this year. About $292 of that or 57% of that shopping will be done offline, per a survey by Deloitte. It is more than double the $115 to be spent online for back-to-school supplies, or 23% of total spending. The remaining 20% are still undecided on whether to shop online or in stores.

About 57% of back-to-school shoppers and 40% of back-to-college customers will opt for departmental stores, while 55% and 49% will go online, per an article published on retaildive. About 52% of the back-to-school shoppers choose to shop from discount stores, 51% would likely drive to clothing stores and 35% to office supply stores. About 35% of college shoppers will hit discount stores, 31% office supply stores and 30% college bookstores.

Per Deloitte, apparel is the segment that will likely be most-purchased offline. This is because kids grow so fast that sometimes returns get necessary due to wrong sizes and the return process is apparently more seamless offline than online.

Walmart (NYSE:WMT) is offering some great prices for some items this back-to-school season. For example, color pencils, markers and crayons will be available for less than $1. The stock has a Zacks Rank #3 (Hold) and VGM Score of B.

Deloitte believes that Target (NYSE:TGT) will be a big beneficiary of the back-to-school shopping season, along with Wal Mart. The stock has Zacks Rank #2 (Buy) with a VGM Score of A. The stock hails from a top-ranked Zacks industry (top 23%).

Deloitte is also bullish on discount retailers, including TJX Companies (NYSE:TJX). It also has Zacks Rank #2 and VGM Score of B. The stock hails from a top-ranked Zacks industry (top 23%). Investors can also target another discount retailer, Dollar Tree (NASDAQ:DLTR), which also has a Zacks Rank #2 and VGM Score of A.

As far as ETFs are concerned, investors can try Wal-Mart-heavy VanEck Vectors Retail ETF (NYSEARCA:RTH). While Wal-Mart has an 8% focus on the fund, TJX and Target each has more than 4% exposure. Dollar Tree and Dollar General (DG) each have 2% exposure to the fund. Target Corp.-heavy Deep Value ETF (NYSEARCA:DVP) should also be on investors’ watchlist. The fund has 8.35% weight in Target Corp.

Changes in Electronics Shopping Pattern

Deloitte’s survey revealed that use of laptops declined from 57% in 2017, to 49% this year. On the other hand, there is a rise in smartphone shopping from 49% in 2017 to 53% this year. This puts First Trust NASDAQ Smartphone ETF (NASDAQ:FONE) in a bright spot.

Though there are plenty of favorable factors behind semiconductor ETFs like VanEck Vectors Semiconductor ETF (NYSEARCA:SMH) and iShares PHLX Semiconductor ETF (NASDAQ:SOXX), a dip in laptop sales may spell some trouble for the segment.

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Article printed from InvestorPlace Media, https://investorplace.com/2018/08/2-etf-stock-takeaways-back-school-shopping-season-ggsyn/.

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