3 ETFs To Add To Your Celebrations On July Fourth

By | July 3, 2015

Scalper1 News

As one of the busiest travel holidays, this Fourth of July promises big business as pockets are heavier and confidence is on the rise. While the strength in the U.S. economy has translated into rising income, cheaper fuel has led to increased savings for long weekend getaways. This is especially true as gasoline price has been on the downtrend over the past couple of weeks. As per the AAA, drivers paid an average of $2.77 per gallon as of July 1, which is below 91 cents per gallon from the year-ago price and the lowest on this date since 2010. This trend is likely to continue over the Independence Day weekend and July 4 gas price will likely be the lowest in at least five years, spurring travelling demand. AAA estimates that 41.9 million Americans will travel 50 miles or more during the holiday weekend (July 1 to July 5) with 85% (35.5 million) choosing to travel by car. This represents maximum travelling since 2007. But the celebration is incomplete without fireworks, barbecues and of course shopping. In fact, Independence Day marks the beginning of the busiest half of the year for retailers. Many retailers are already flashing exciting deals for July Fourth and massive discounts are in the cards for a specific day. Among the most notable, Best Buy (NYSE: BBY ) is offering up to 40% discount on major appliances, including refrigerators, ranges and dishwashers while the departmental store Macy’s (NYSE: M ) is offering the “lowest prices of the season” on indoor and outdoor furniture, and mattresses on Independence Day. The online e-commerce behemoth Amazon (NASDAQ: AMZN ) will celebrate with limited-time price cuts on movies, books, music and more. About 23% of consumers would hit the stores in search of decorative items, apparels, and groceries. Spending per household is estimated at $71.23, up from $68.16 last year, according to the National Retail Federation (NYSE: NRF ). Further, Americans are expected to spend $6.6 billion on food alone. That being said, this holiday will be a celebration of not only freedom, but also economic growth. Along with the spirit of the Americans, this July Fourth weekend should lift revenues and profits in various corners. Industries like transportation, lodging, hotel, restaurants, food and retail will benefit the most. Investors seeking to tap the July Fourth fanfare could ride on these industries through the following ETFs: iShares Dow Jones Transportation Average ETF (NYSEARCA: IYT ) The ETF provides exposure to the broad transportation sector by tracking the Dow Jones Transportation Average Index. The fund holds a small basket of 20 stocks with heavy concentration and dominance in the top 10 holdings. Railroad takes the top spot at 46.3% while airfreight & logistics and airlines round off to the next two spots with double-digit allocation each. The fund has accumulated $841 million in its asset base while it sees good trading volume of around 442,000 shares a day. It charges 43 bps in fees and expenses and has a Zacks ETF Rank of 3 or ‘Hold’ rating with a High risk outlook. SPDR S&P Retail ETF (NYSEARCA: XRT ) This product tracks the S&P Retail Select Industry Index, holding 104 securities in its basket. It is widely spread across each component as none of these hold more than 1.15% of total assets. In terms of sector holdings, about one-fourth of the portfolio is allotted to apparel retail while specialty stores, Internet retail and automotive retail also receive double-digit allocation each. XRT is the most popular and actively traded ETF in the retail space with AUM of about $1.1 billion and average daily volume of about 2.1 million shares. It charges 35 bps in annual fees and has a Zacks ETF Rank of 1 or ‘Strong Buy’ rating with a Medium risk outlook. PowerShares Dynamic Leisure and Entertainment Portfolio ETF (NYSEARCA: PEJ ) This fund tracks the Dynamic Leisure and Entertainment Intellidex Index and holds a small basket of 30 US leisure and entertainment companies. The product is pretty well spread out across various securities as none accounts for more than 5.14% of total assets. From an industrial look, the fund is heavy on airlines and restaurants that collectively make up for 58% share, closely followed by hotels & leisure facilities (20%). The ETF has amassed $181.2 million in its asset base and trades in light volume of 49,000 shares a day on average. Expense ratio came in at 0.63%. PEJ has a Zacks ETF Rank of 3 with a Medium risk outlook. Original Post Scalper1 News

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