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Is Trade Scaring You? ETF Strategies for 2019 Holiday Season

We are now in the thick of the holiday season. Per NRF, the holiday season runs from Nov 1 through Dec 31, when solid buying normally boosts consumer discretionary stocks and some other areas of the economy.

A consensus carried out from 1950 through 2018 has revealed that December offered positive returns in 51 years and negative returns in 18 years, the average return being 1.35%, the second best seen in a year, as per moneychimp.com. It is believed that a Santa Clause rally normally drives markets, at this time of the year.

Meanwhile, the average return in November was 1.39%, the best in a year. NRF now expects retail sales in November and December to expand between 3.8% and 4.2%. Consumers are planning to spend $1,048, on average, which is 4% higher than last year.

However, uncertainty over the U.S.-China phase-one trade deal, caused by occasional anti-deal rhetoric, could crash the market momentum. Investors’ focus is now on Dec 15 — the date for the imposition of another round of tariffs on Chinese goods (read: Not Santa, Trade Will Rule This December: ETFs to Your Rescue).

Given this scenario, it is less likely that Santa alone will drive Wall Street this season. Nonetheless, a spike in Christmas shopping can definitely do wonders for the markets (read: What Soft Confidence? 3 ETFs & Stocks for Solid Holiday Buying).

Against this scenario, below we highlight some ETF strategies for the holiday season.

Take a Bite Out of Apple

Many Wall Street analysts are bullish on Apple this time around. Citigroup’s Jim Suva believes“this Christmas is different for Apple” and raised Apple’s price target with a Buy rating. “Apple’s product offerings as well as pricing strategies and recent demand trends” should make Apple a winner this holiday season.

Apple’s AirPods could see a shortage because of their popularity in the holiday season, per Wedbush analyst Dan Ives. A survey conducted by Piper Jaffray shows that Apple is the “top-listed consumer brand for teens” this holiday season. Apple Watch devices and AirPods are likely to serve as great holiday gifts. 

Other research houses like Bernstein, Morgan Stanley and Barclays have also been betting big on Apple’s wearables segment. Demand for iPhone 11 has been strong. So bet on Apple-heavy ETFs like Select Sector SPDR Technology ETF XLK, Vanguard Information Technology ETF VGT and MSCI Information Technology Index ETF FTEC (read: After a Sweet November, Apple ETFs are Set for a Warm December).

Online Shopping Wins All Out: Good Long-Term Bet

Consumers are splurging on online shopping this year. U.S. consumers have already shelled out $50.1 billion online between Nov 1 and Nov 26, 2019 — marking an increase of 15.8% year over year, per Adobe Analytics (read: Shop Online ETFs & Stocks for Black Friday & Beyond).

Per Adobe, online sales jumped 14.5% year over year to a record $4.2 billion on Thanksgiving.  Black Friday and Small Business Saturday also witnessed record figures of $7.4 billion, up 20% and $3.6 billion, up 18%, respectively. Notably, Thanksgiving sales surpassed $4 billion for the first time ever. Cyber Monday also broke another record by raking in $9.4 billion in online sales.

Some of the winners of the trend are the likes of Amazon AMZN, Shopify SHOP and PayPal PYPL. So, make the most of this trend with ProShares Online Retail ETF ONLN, Online Retail Amplify ETF IBUY and ETFMG Prime Mobile Payments ETF IPAY.

Bet on Biotech

The Santa rally for the biotech space started long before December, thanks to loads of mergers and acquisitions, positive drug data and FDA approvals. Trade tensions are not likely to have a major impact on biotech. Investors can thus buy VanEck Vectors Biotech ETF BBH, SPDR S&P Biotech ETF XBI and iShares Nasdaq Biotechnology ETF IBB. All the Buy-ranked.

Value Stocks & ETFs Good Picks Right Now

In uncertain times, value stocks appear as safer bets. Also, per Bank of America, “Value has never been this cheap vs. Momentum.” Also, after a stupendous rally since the start of the fourth quarter, Wall Street looks a bit overvalued. So, looking for value could be a good idea.

Invesco S&P 500 Enhanced Value ETF SPVU, Legg Mason International Low Volatility High Dividend ETF LVHI and iShares MSCI EAFE Value ETF EFV offer good value. LVHI and EFV yield more than 4% (read: 5 Dividend ETFs to Tap if the Initial Trade Deal Fails).

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Amazon.com, Inc. (AMZN): Free Stock Analysis Report
 
Shopify Inc. (SHOP): Free Stock Analysis Report
 
PayPal Holdings, Inc. (PYPL): Free Stock Analysis Report
 
Fidelity MSCI Information Technology Index ETF (FTEC): ETF Research Reports
 
Legg Mason International Low Volatility High Dividend ETF (LVHI): ETF Research Reports
 
Amplify Online Retail ETF (IBUY): ETF Research Reports
 
iShares Nasdaq Biotechnology ETF (IBB): ETF Research Reports
 
ETFMG Prime Mobile Payments ETF (IPAY): ETF Research Reports
 
Vanguard Information Technology ETF (VGT): ETF Research Reports
 
SPDR S&P Biotech ETF (XBI): ETF Research Reports
 
VanEck Vectors Biotech ETF (BBH): ETF Research Reports
 
Technology Select Sector SPDR Fund (XLK): ETF Research Reports
 
Invesco S&P 500 Enhanced Value ETF (SPVU): ETF Research Reports
 
iShares MSCI EAFE Value ETF (EFV): ETF Research Reports
 
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