Erste Asset Management

Bargains, sales and dividends: Hopeful signs for US retail investors

Bargains, sales and dividends: Hopeful signs for US retail investors
Bargains, sales and dividends: Hopeful signs for US retail investors
(c) istock
Share post:

mobile phones

Last Friday saw the launch of Black Week, which marks the start of the holiday season in the US retail sector. Traditionally, the Black Friday and Cyber Monday sales after Thanksgiving are regarded as a prelude to the high-turnover weeks towards the close of the year. However, while the annual retail tradition provides buyers a wealth of offers and discounts, it is above all a benchmark for the US economy’s most important pillar.

Underestimated economic driver

Consumer spending by private households accounts for around two-thirds of the US’s total GDP, according to data from the Bureau of Economic Analysis, as much as 68.1 per cent in Q3 of 2019. This figure has remained consistently high over the past few years and is regarded as a reliable pillar of economic performance, particularly in times of otherwise less pronounced economic growth.

Apart from the macroeconomic view, this time is particularly important for investors in large retail groups. High turnover favours attractive dividend opportunities, and so investors are also looking forward to holiday season. This year, however, the landscape is showing mixed results.

Varying baselines for retail shares

In view of the tough competition, Amazon, the world’s largest online retailer, is expecting significantly weaker business in the important last quarter than stock market experts project. For the quarter that includes Thanksgiving and Christmas, the Group expects net revenues of between USD 80bn and 86.5bn.  Analysts’ expectations have been lying at USD 87.37bn.

On the other hand, Wal-Mart, the largest US retailer, performed better than expected in Q3 thanks to booming online sales. Between August and October, profits increased more than 90 per cent to USD 3.3bn year-on-year.

Indicators point to solid consumer spending

According to the latest data from the Washington Department of Commerce, US retailers were able to increase their sales slightly in October, with revenues increasing 0.3 per cent month-on-month – slightly higher than economists’ expectations. In previous months, sales had been significantly stronger, in some cases surprisingly.

However, according to the Conference Board research institute, the mood among US consumers unexpectedly deteriorated in November. The corresponding barometer fell from 126.1 points in October to 125.5 points – experts had expected an increase.

Nevertheless, the Federal Reserve’s (Fed) economists remain confident overall: “At this point in the long expansion, I see the glass as much more than half full,” said Fed chairman Jerome Powell recently. This can also partly be attributed to private consumption, which rose by 2.9 per cent in Q3 – which means that everything should be set for a holiday season that is not only enjoyable fo consumers and economists, but also for investors.

Note: Past performance is not indicative of future development. Date: 29th of November

ERSTE RESPONSIBLE STOCK AMERICA: “good conscience” on US equities with good opportunities

Consumer stocks also play a role in ERSTE RESPONSIBLE STOCK AMERICA. This fund, which focuses on US and Canadian equities, is invested in listed companies of all sizes. The selection of shares eligible for the fund is based on the sustainable criteria of Erste Asset Management. Stocks such as Procter & Gamble, Pepsi or the payment company VISA are currently prominently represented in the portfolio. The ERSTE RESPONSIBLE STOCK AMERICA offers the opportunity for high increases in value as this year and in the last 5 years. As an investor, you have to be aware of the fact that stock prices can fluctuate strongly at any time and that a loss of capital is also possible. A longer holding period of at least 6 years is therefore recommended.


Legal note:
Prognoses are no reliable indicator for future performance.


Legal disclaimer

This document is an advertisement. Unless indicated otherwise, source: Erste Asset Management GmbH. Our languages of communication are German and English.

The prospectus for UCITS (including any amendments) is published in accordance with the provisions of the InvFG 2011 in the currently amended version. Information for Investors pursuant to § 21 AIFMG is prepared for the alternative investment funds (AIF) administered by Erste Asset Management GmbH pursuant to the provisions of the AIFMG in connection with the InvFG 2011. The fund prospectus, Information for Investors pursuant to § 21 AIFMG, and the Key Information Document can be viewed in their latest versions at the web site within the section mandatory publications or obtained in their latest versions free of charge from the domicile of the management company and the domicile of the custodian bank. The exact date of the most recent publication of the fund prospectus, the languages in which the Key Information Document is available, and any additional locations where the documents can be obtained can be viewed on the web site A summary of investor rights is available in German and English on the website as well as at the domicile of the management company.

The management company can decide to revoke the arrangements it has made for the distribution of unit certificates abroad, taking into account the regulatory requirements.

Detailed information on the risks potentially associated with the investment can be found in the fund prospectus or Information for investors pursuant to § 21 AIFMG of the respective fund. If the fund currency is a currency other than the investor's home currency, changes in the corresponding exchange rate may have a positive or negative impact on the value of his investment and the amount of the costs incurred in the fund - converted into his home currency.

Our analyses and conclusions are general in nature and do not take into account the individual needs of our investors in terms of earnings, taxation, and risk appetite. Past performance is not a reliable indicator of the future performance of a fund.

Leave a comment Required fields are marked with *

Your email address will not be published. Required fields are marked *