3 funds to buy on soaring retail sales

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Jhe retail sector was one of the hardest hit at the height of the pandemic and since then has struggled to rebound. After a roller coaster ride in 2020, things finally seem to be changing, with retail sales now picking up.

However, there are plenty of challenges, with rising prices being one of the biggest. Despite all this, people are still willing to spend because they now have more money available. Thus, funds like Fidelity Select Consumer Discretionary Portfolio FSCPX, Fidelity Select Consumer Staples Portfolio FDFAX and Fidelity Select Retail Portfolio FSRPX should benefit from this in the short term.

Retail sales jump in February

The Commerce Department said March 16 that retail sales jumped 0.3% in February. While that’s much slower than January’s 4.9% gains, the good thing is that 2022 has started on a high note for retailers, with sales surging in the first two months of the year.

Moreover, the jump comes despite rising costs, which have prompted many to spend cautiously. February sales were mainly fueled by a 5.3% jump in gasoline spending as energy costs continued to climb due to the ongoing Russian-Ukrainian war.

However, despite rising costs, people are willing to spend, suggesting the sector is on track for a faster recovery. Of the 13 retail sectors, sales rose in seven.

Additionally, the US unemployment rate hit a low of 3.8%, showing that people are finally getting back to work. This means people are earning more now and are likely to spend in the days to come. Moreover, disposable income has increased almost throughout the pandemic. Additionally, household savings hit a new high in 2021, signaling that consumer spending will pick up. in the coming months.

3 best choices

So we’ve selected three mutual funds with significant exposure to the retail sector that carry a Zacks mutual fund rank of #1 (Strong Buy) or #2 (Buy) and are poised to take advantage of the above factors. In addition, these funds have encouraging returns over three and five years. Also, the minimum initial investment is less than $5,000.

We expect these funds to outperform their peers going forward. Remember, the purpose of the Zacks Mutual Fund Rankings is to guide investors in identifying potential winners and losers. Unlike most fund rating systems, Zacks Mutual Fund Rankings focus not only on past performance, but also on the likely future success of the fund.

The question here is: why should investors consider mutual funds? Reduced transaction costs and portfolio diversification without multiple commission fees associated with stock purchases are the main reason to invest money in mutual funds (learn more: Mutual Funds: pros, cons and how they make money for investors).

Fidelity Select Consumer Discretionary Portfolio fund seeks capital appreciation. FSCPX invests the majority of its assets in securities of companies generally engaged in the production, distribution and marketing of consumer discretionary products. Fidelity Select Consumer Discretionary Portfolio fund invests in US and non-US issuers.

The Fidelity Select Consumer Discretionary Portfolio has had a track record of positive total returns for more than 10 years. Specifically, FSCPX has returned 17.4% and 15.8% over the past three and five years, respectively. To see how this fund performed against its category and other mutual funds ranked 1 and 2, please click here.

FSCPX has a Zacks mutual fund rank of No. 2 and an annual expense ratio of 0.76% compared to the category average of 0.79%.

Fidelity Select Consumer Staples Portfolio fund seeks capital growth. FDFAX invests the majority of its assets in the securities of companies whose principal activity is the manufacture, marketing or distribution of basic consumer products. The Fidelity Select Consumer Staples Portfolio fund invests in US and non-US issuers.

The Fidelity Select Consumer Staples Portfolio has a history of positive total returns for more than 10 years. Specifically, FDFAX has returned 13.9% and 7.8% over the past three and five years, respectively. To see how this fund performed against its category and other mutual funds ranked 1 and 2, please click here.

FDFAX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.75% compared to the category average of 0.76%.

Fidelity Select Retail Portfolio fund seeks capital appreciation. FSRPX invests a large portion of its assets in common stocks of companies engaged in the marketing of finished products and services, primarily to individual consumers.

The Fidelity Select Retail Portfolio has had a track record of positive total returns for more than 10 years. Specifically, FSRPX has returned nearly 19.1% and nearly 18.4% over the past three and five periods, respectively. To see how this fund performed in its category, and other mutual funds ranked 1 and 2, please click here.

FSRPX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.73%, which is below the category average of 0.79%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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