ETFs to Win/Lose From Thanksgiving Amid COVID-19 Restrictions
The time has arrived to thank all good things in life despite the scars of pandemic. Most Americans have a celebratory meal on the fourth Thursday of November. Though vacations are also part of the Thanksgiving celebration, COVID-19 may spoil plans. Let’s see how Thanksgiving will shape up this year and benefit/hurt which ETF areas.
Thanksgiving Meal Cheaper This Year: Good for Staples Stocks?
The average cost of this year’s Thanksgiving feast for 10 is $46.90, down about $2 from last year’s average of $48.91, according to the American Farm Bureau Federation, as quoted on CNBC. The cost is the cheapest since 2010.
Even the main item of the event, the turkey, is coming at $1.21 per pound, down 7% year over year. BJ’s and Kroger are offering free turkeys with purchases crossing a specified limit. So, one can expect copious consumption of Turkey this year.
Forget dine-at-home, dining outside should also be in the cards this Thanksgiving. Many are planning to pick takeaways.Apart from restaurants, stores like Walmart (WMT) and Target (TGT) will likely generate good business due to increased footfall and online sales aided by deals and offerings. About 82% of hosts will look for deals, per a source.
A report from LendingTree showed that Americans will spend $475 hosting Thanksgiving, including food, drink and home decor, up 53% from 2019. About 41% of Americans plan to host guests on Thanksgiving, up from 33% in 2019.
All in all, food and beverage companies, and grocery stores will likely witness solid sales volume this Thanksgiving due to more focus on celebration at-home. Consumer Staples Select Sector SPDR Fund XLP, Fidelity MSCI Consumer Staples Index ETF FSTA, Vanguard Consumer Staples ETF VDC and VanEck Vectors Retail ETF RTH are some of the examples of the likely winning ETFs.
Spending Pattern to Make Retailers Wealthy?
The LendingTree article indicated that Thanksgiving hosts are expected to spend $343.26 on food and drink, plus $131.74 on new houseware like dishes, furniture, linens and décor. Hosts will spend an average of $52.78 per guest. About a 24% of hosts expect to spend more this year. Millennials are likelyto spend the most of any generation ($556.46), which should put Global X Millennials Thematic ETF MILN in a sweet spot. Overall, retailers’ business is up for a solid stretch ahead, making SPDR S&P Retail ETF XRT a nice bet.
No Thanks to Travel & Hotel Industry
According to travel service provider AAA, thanksgiving holiday travel would be subdued this year due to the pandemic. Since staying at home is the best way to prevent the spread of the virus, AAA anticipates at least a 10% decline in travel – the largest one-year drop-off since the Great Recession in 2008. Higher unemployment has also curbed the euphoria.
Based on mid-October forecast models, about 50 million Americans are expected to travel for Thanksgiving, suggesting a decline from 55 million in 2019, per AAA. Air travel is expected to fall by 50% this year, marking the largest percentage on record. Other means of mass transportation, like buses and trains, are expected to decline by 76%.
Still, travelling by car will be a prevalent option. So, we expect First Trust NASDAQ Global Auto Index Fund CARZ to still benefit amid the pandemic while U.S. Global Jets ETF JETS is not likely to benefit from Thanksgiving 2020.
iShares Transportation Average ETF IYT should also not be in a favorable position as the fund encompasses all sort of transportations. Having said this, we would like to mention that the latest flurry of upbeat vaccine data have boosted transportation ETFs in recent sessions.
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Consumer Staples Select Sector SPDR ETF (XLP): ETF Research Reports
SPDR S&P Retail ETF (XRT): ETF Research Reports
VanEck Vectors Retail ETF (RTH): ETF Research Reports
iShares Transportation Average ETF (IYT): ETF Research Reports
First Trust NASDAQ Global Auto ETF (CARZ): ETF Research Reports
U.S. Global Jets ETF (JETS): ETF Research Reports
Fidelity MSCI Consumer Staples Index ETF (FSTA): ETF Research Reports
Vanguard Consumer Staples ETF (VDC): ETF Research Reports
Global X Millennials Thematic ETF (MILN): ETF Research Reports
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