Online retail is here to stay and it is only going to get bigger. We have witnessed a total reset of how things will be for a while. In my opinion, retail outlets could turn into glorified warehouses that become a destination to pick up your order, and that is the best case. Otherwise, they are toast. That’s a bold statement and the only thing I have to back it up is past performance of the retail stocks vs. the online retailers. You can even have a car delivered to your house, just go check out Carvana and Vroom.
Retail Stocks:
Kohl’s – KSS topped out toward the end of 2018 and has been dreadful since falling from $80 a share to $20.
Nordstroms – JWN – Also topped out in late 2018 and has fallen from the $70 range into the teens!
Neiman Marcus filed for bankruptcy as it struggled to stay afloat with a massive amount of dbt, they were the first department store to fall. J.C. Penney was just a few weeks behind them.
Ascena Retail Group – You might ask, ‘Who are they?’ Oh, they own Ann Taylor, LOFT, Lane Bryant, Justice and other retail brands and they operate about 2,800 stores in the U.S. and Canada. Picture tells 1000 words. Disaster.
Bed Bath and Beyond – BBY – Just another disaster and it started back in 2016 when the stock was in the $60 range. It recently touched $3.50.
Can you see what is happening? Start to think online. Go look at your recent purchases, where were they? Chances are Amazon was one of the places and they are the clear winner. But there are others to consider.
Wayfair – W – This online retail stock has not only performed but our fundamental rating also turned bullish in May as Neiman Marcus and JC Penney filed for Bankruptcy.
eBay – EBAY – Did you forget about this one? It recently doubled.
PayPal – PYPL – easy and secure way to buy online.
I could go on and on but you get the picture. Now let’s look at the stats.
Retail vs. Online
E-Commerce recorded and accounted for over 56% of the entire gains of the overall retail market last year. That is the largest wallet share of retail revenue since 2008. And this is only the third time in history where online shopping beat in store shopping. You might think that is ancient history since it is BC (Before Covid), but we will look back on this time and see it has the turning point, in my opinion.
ETF to Use
ProShares Online Retail ETF – ONLN – An excellent mix of names that are all benefiting from online shopping.
The fact is there is a spike in new Covid-19 cases, the second lockdown may be in the near future and we have all decided that it is extremely convenient to order online. It’s got an anticipation factor to it as well. You know the date it is supposed to be at your door, you forget about it and when it shows up, it’s fun to open that package even though you already know what is inside.
Pete Carmasino is Managing Director at PortfolioWise, an ETF ratings system powered by Chaikin Analytics. Pete has over 25 years in the capital markets industry. He previously ran his own RIA firm for several years where he created his own ETF model strategy. In prior roles, Pete was a High Net Worth Advisor and Institutional Sales Trader.
Follow Pete on Twitter @carmasino