Opinions
Paul Harris, CFA
SPDR Cons Discretionary ETF
XLY-N
BUY
Nov 09, 2015
$80.300
Stock price when the opinion was issued
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COMMENT
One of the issues with the Consumer Discretionary space is what is called the “Amazon affect”, which has had such a major impact on so many retailers. He thinks you are almost better off picking a retailer that has been able to restructure itself and immunize itself as best as possible against Amazon. Coach (COH-N) would be an example. If you can afford it, he would buy Amazon as your starting point and look for a couple of retail companies that you think have an opportunity to continue.
E.T.F.'s
TOP PICK
Consumers are still spending money. The unemployment rate is really low. The consumer discretionary sector has been responding positively. There is an ascending triangle from the beginning of 2019 to the end and then it ticked up further. The seasonality is not until April. You don’t want to see the jobless rate tick higher.
E.T.F.'s
PAST TOP PICK
(A Top Pick Feb 07/20, Down 9%) This was the peak of the market. AMZN-Q is about a quarter of this ETF. It is important to know what is in an ETF before buying it. He exited this sector.
E.T.F.'s
BUY ON WEAKNESS
Allan Tong’s Discover Picks Other major retail stock holdings in XLY are the Home Depot and Lowe‘s (home improvement has soared during Covid), McDonald‘s, Starbucks and Nike (strong global brands) and TJX. XLY’s MER is only 0.12%, though it pays a modest 0.67% dividend yield. Currently trading around $173, XLY is $7 off its recent highs. With summer spending expected to remain robust, XLY will likely return to those highs, but it’s probably worth waiting for at least a 5% pullback before entering, as market volatility driven by uncertain interest rates will likely endure in coming weeks. Read 3 Retail Stocks to Buy Now: Ready, Set, Shop for our full analysis.
E.T.F.'s
The US consumer discretionary sector has done incredibly well for 2 reasons. Amazon (AMZN-Q) falls in there as well as Netflix (NFLX-Q). This is a season where consumer discretionary should do well. A marginal increase in interest rates is not going to affect consumer spending as much as people think.