3 Funds to Outshine as Retail Sales Jump in September

Zacks Equity Research
·5-min read

On Oct 16, the Commerce Department reported a jump in retail sales for the fifth straight month in September, rising 1.9%. The figure not only surpassed August’s jump of 0.6% but was also above the consensus estimate of 0.8%. The report suggests that the rise in retail sales was primarily driven by increased spending by Americans on clothes, cars and trucks and dining out. September’s report highlights the rebound in retail sales to pre-pandemic levels at a faster-than-expected pace.

Sales in clothing stores jumped 11%, while sales rose 3.6% at auto dealers. While sales at bars and restaurants rose 2.1%, sales at the department stores rose almost 10%. Sales at sporting goods, hobby, and musical instrument and book stores increased 5.7%, while furniture stores witnessed a 0.5% gain.

American consumers also hold strong prospects of the economy’s health, which will help boost the retail space. According the University of Michigan’s report released on Oct 16, the preliminary reading of consumer sentiment index increased to 81.2 in October, higher than the consensus estimate and September’s reading of 80.4. The index has now hit its highest level since March at the time when the coronavirus pandemic slammed the U.S. economy and businesses were forced to close down.

Holiday Season Around the Corner

Additionally, the retail space may gain further from the upcoming holiday season. With Halloween, Thanksgiving, Cyber Monday, Black Friday and Christmas lined up during the late October-December period, retailers are hopeful to recover the losses incurred due to the pandemic. Per Deloitte’s annual holiday retail forecast, holiday retail sales are expected to increase between 1% and 1.5%, leading to sales between $1,147 billion and $1,152 billion, especially during the November-January timeframe.

Deloitte also forecasts e-commerce sales growth of 25% to 35% year over year during this holiday season to generate between $182 billion and $196 billion, compared with a 14.7% e-commerce sales increase in 2019. In fact, the declining unemployment, hopes of fresh fiscal stimulus and developments in coronavirus vaccine could boost spending.

3 Top Fund Choices

Given the positive forecasts, we have selected three funds that can make the most in this holiday season. These funds carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging one and three-year returns. Additionally, the minimum initial investment is within $5000.

We expect these funds to outperform peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also on the likely future success of the fund.

The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).

Fidelity Select Retailing Portfolio FSRPX fund aims for capital appreciation. This non-diversified fund invests majority of its assets in securities of companies that merchandise finished goods and services to individual customers. FSRPX has returned 26.2% and 19.1% in the past three and five years, respectively.

This Zacks Sector-Other product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FSRPX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.74%, which is below the category average of 1.22%.

Fidelity Select Consumer Discretionary Portfolio FSCPX fund aims for capital appreciation. This non-diversified fund invests majority of its assets in common stocks of companies that manufacture and distribute consumer discretionary goods and services. FSCPX invests in both domestic and foreign stocks and has returned 19.3% and 14.8% in the past three and five years, respectively.

This Zacks Sector-Other product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FSCPX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.76%, which is below the category average of 1.22%.

Fidelity Select Leisure Portfolio FDLSX fund aims for capital appreciation. It invests at least 80% of its assets in companies that design, produce or distribute goods or services in the leisure industries. This non-diversified fund invests in both domestic and foreign stocks and has returned 8.9% and 9.7% in the past three and five years, respectively.

This Zacks Sector-Other product has a history of positive total returns for more than 10 years. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.

FDLSX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.76%, which is below the category average of 1.22%.

Want key mutual fund info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>

Click to get this free report Get Your Free (FSRPX): Fund Analysis Report Get Your Free (FDLSX): Fund Analysis Report Get Your Free (FSCPX): Fund Analysis Report To read this article on Zacks.com click here. Zacks Investment Research