Key Points
- Thanksgiving saw a substantial $38 billion in online spending, indicating a strong consumer base despite economic uncertainties.
- A significant 7.8% increase in Cyber Week spending has revived optimism for the retail sector.
- The SPDR S&P 500 Retail ETF (XRT) has reflected this positivity, with a 10% surge last month and a 2% rise this week.
- 5 stocks we like better than Signet Jewelers
The holiday shopping season got off to a strong start in the retail sector as U.S. shoppers were attracted by considerable discounts across various categories, resulting in $38 billion in online spending over the Thanksgiving weekend.
Despite prevailing economic uncertainties, this surge in spending, which saw a noteworthy 7.8% increase during Cyber Week compared to initial projections of 5.4%, indicates a robust consumer appetite and sets a promising tone for the upcoming shopping period.
The popular retail sector ETF, the SPDR S&P 500 Retail ETF NYSE: XRT, experienced a surge of over 10% last month and almost 2% just this week, reflecting the growing optimism.
As optimism increases and the sector surpasses notable resistance and key moving averages, it’s worth taking a closer look at the XRT.
What is the XRT?
The SPDR S&P Retail ETF aims to mirror the S&P Retail Select Industry Index’s performance, an equally weighted market cap index representing the retail sub-industry within the S&P Total Market Index. The ETF invests in various retail sectors, including apparel, automotive, food, department stores, online retail, general merchandise, drug retail, hypermarkets, and supercenters.
The ETF has $484 million in assets under management and offers a dividend yield of 2.01% and a net expense ratio of 0.35%. Its holdings’ geographic exposure is predominantly in the United States, with a 98.5% exposure to the region. Regarding sector exposure, the ETF is mainly exposed to the Consumer Discretionary sector, with a 67% exposure.
The XRT holds a Hold aggregate rating based on evaluations from 697 analysts covering around 71.3% of its portfolio across 50 companies. Looking at its price target, XRT sits at $72.61, suggesting a potential upside of 12.40%. Analysts’ predictions span from $48.93 to $97.55, considering the range of evaluations within the portfolio’s 50 companies.
The recent performance of top holdings of the ETF
The ETF’s top holding is Carvana NYSE: CVNA, with a weight of 3.21%. Year-to-date, the stock is up an impressive 560%, and over the last month, it saw a substantial 20.44% increase. Its recent performance has contributed positively to the ETF’s overall performance, despite analysts’ Reduce rating on CVNA, based on fifteen analyst ratings. The price target of $36.67 predicts an upside of over 17%.
For now, optimism has returned to the sector
During Thanksgiving, the retail sector experienced a $38 billion online spending spree, showcasing a strong consumer base amid economic uncertainties. This 7.8% increase in Cyber Week spending has reignited optimism for the sector, exemplified by the XRT ETF experiencing positive flows last month and rising 10% and 2% so far this week. Notably, key holdings like Carvana, Signet Jewelers, and Kohl’s have contributed positively, suggesting that the sector is likely to continue its momentum into the holiday season.
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