Tag Archive | Consumer Discretionary

Four ETFs Influenced By McDonalds

The world’s largest restaurant chain, McDonald’s Corp. (MCD) reported increases in revenues and net income for the fourth quarter, meeting analyst expectations and giving support to the Consumer Discret Select Sector SPDR (XLY), the iShares Dow Jones US Consumer Services (IYC), the Vanguard Consumer Discretionary (VCR) and the PowerShares Dynamic Food & Beverage (PBJ). 

Revenues for the Oak Brook, Ill-based company jumped 4 percent to $6.21 billion, of which $4.2 billion were generated through company-operated restaurants and nearly $2 billion from franchise-operated restaurants.    Furthermore, total operating income grew by 5 percent from the prior-year quarter to $1.16 per share helping push earning year over year up nearly 6 percent.    Read More…

Three ETFs Influenced By Black Friday

With Thanksgiving right around the corner, the nation’s single busiest shopping day is about to unleash, and whether or not the retail sector will get a boost this holiday season is ambiguous, however, the Retail HOLDRs (RTH), the iShares Dow Jones US Consumer Services (IYC) and the SPDR S&P Select Retail (XRT) are likely to be influenced regardless of the outcome.

A poll conducted by the National Retail Federation shows that up to 138 million shoppers may visit the nation’s shopping malls over the Black Friday weekend, an increase of nearly 3 percent from last year.  Many are expected to flock to the blockbuster bargains that are being offered by retailer like Wal-Mart (WMT), Target (TGT) and Best Buy (BB).  Wal-Mart is expected to offer DVDs for as little as $1.96, Blue-Ray Disc Movies for $10 and some kitchen appliances for under $3, while Target is following a similar path and is also expected to offer a 40 inch LCD HDTV for under $300 and Best Buy is advertising netbook computers starting at under $150.    Read More…

Four ETFs Driven By Consumer Spending

The US economy grew at a faster than expected rate in the third quarter of this year, buoyed much by an increase in consumer spending, however, is still not growing at a rate to generate new jobs.  Despite this, a ray of light may shine on sectors driven by consumer spending enabling the Consumer Discretionary Select Sector SPDR (XLY), the Vanguard Consumer Discretionary (VCR), the PowerShares Dynamic Consumer Discretionary (PEZ) and the Retail HOLDRs (RTH) to reap the benefits.

According to the Commerce Department, consumer spending, this accounts for nearly 70 percent of US GDP, increased by 2.4 percent annually during the third quarter of this year.  Furthermore, retail sales rose in each of the three months in the third quarter with a further detail indicating that this rise is broad based.  Read More…

Four Fast Food ETFs That Are Tasty

Despite a rollercoaster ride in the stock market and uncertainty in the overall strength of the global economic recovery, some fast food stocks and exchange traded funds (ETFs) that hold them remain attractive.

First off, as long as the unemployment rate remains north of 9% and employers remain cautious about hiring, consumers will continue to seek discount alternatives, and when it comes to eating, fast food joints will likely be the benefactors of this trend. 

One such fast food chain positioned to reap the benefits of consumer’s penny pinching is McDonalds (MCD).  The Oak Brook, Illinois-based fast food giant’s emphasis on value contributed to the burger chain reporting double-digit percentage growth in first-quarter revenue and earnings, highlighted by robust sales returning to the U.S.  In the U.S., earnings rose 11% and revenue increased 10%.  Similar trends were seen internationally, as McDonald’s global same-store sales rose 4.2%, with the Asia/Pacific, Middle East and Africa segment gaining 5.7% and Europe increasing by 5.2%. Read More…

Retail Health Remains Questionable

As the economy starts to recover and consumers start to come out of their shells, retailers have reaped the benefits of extra spending.  Some are even taking on additional efforts to retain these customers and their spending habits; however, the likelihood that these trends are sustainable is unclear.

According to the most recent report issued by the Commerce Department, a range of retailers boasted month over month gains, enabling the sector as a whole to show seasonally adjusted increases of 0.3% in February over the prior month.  Additionally, a Thomson Reuters index of 28 retailers suggests that sales at stores open at least one year, rose 4% in February compared with a year ago.  

Of all the retail sub-sectors, electronics and appliances saw the largest gains followed by groceries.  Despite wary consumer sentiment over the health of the economy, illustrated by the recent decline in the University of Michigan/Reuters consumer-sentiment index, which registered at 72.5, some retail experts suggest that consumers see the light at the end of the tunnel and are starting to upgrade their appliances and adding additional items to their shopping baskets at the checkout line. Read More…

Retail ETFs May Have Muddy Path

By Kevin Grewal

The retail sector posted its third consecutive monthly sales gain as department stores posted sales revenues which beat analyst expectations; however, the road ahead still remains bumpy. 

Department store giant Macys Inc. (M) as well as discount store Target (TGT), both reaped the benefits of an increase in traffic and a jump in the average amount spent by consumers, pushing increases in sales by 4% and 2.4%, respectively.    Additionally, Wal-Mart (WMT) stated that it is expecting to pay back its investors by increasing its annual dividend by 11%. 

Increases in consumer spending, and hence retail sales, have been linked to an expected increase in average hourly earnings and average hours worked, giving a boost to disposable income.  Additionally, some sector experts suggest that an increase was inevitable due to such poor sales figures in the month before.  Read More…

Ford Motor, A Hidden Treasure

By Kevin Grewal

In the last quarter, Ford Motor Company (F) swung to its first quarterly profit in the past five years and there are plenty of indicators that suggest a bright outlook for one of the first automakers in the United States.

From a fundamental perspective, things seem to be heading in the right direction for Ford.  The company remains competitive, has indicated positive operating cash flows and has boasted a 22% increase in revenues from a year ago.   Additionally, Ford was the only large U.S. automaker to make it through the global financial meltdown without reorganizing under a government-managed bankruptcy.

Ford is destined to gain market share at the expense of Toyota’s (TM) problems.  Toyota has suspended sales of eight of its top sellers and Ford produces several vehicles which are direct competitors to the recalled and suspended Toyotas.  Read More…

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