A retail stock is a stock of a company that sells retail merchandise to consumers.
- A retail stock is a stock of a company that sells retail goods – things that people want but do not always need – to consumers online and/or in a store
- Retail stocks are part of a highly volatile industry that is dependent on changing consumer demographic and taste
- Retail investors frequently use sector rotation as an investment strategy to make the most of their retail stocks
What is a retail stock?
A retail stock is a stock of a company that sells retail goods to consumers online and/or in a store. Retail goods are things that people want but do not always need. The following businesses are typically associated with the retail sector:
- Department stores
- E-commerce internet platforms
- Home goods and furnishings
- Auto parts
- Computers and other technological devices
Investors can count on retail as a resilient sector that is unfazed by business cycles – people shop regardless of the state of the economy. However retail stocks tend to be more volatile because they are entirely reliant on consumer demographic and taste.
Investment strategy for retail stocks
Sector rotation is an investment strategy used by investors to make the most of retail stocks in their portfolios. The strategy is to move your money in stocks from one industry to another as you anticipate which industry will be more stable than another in the next economic cycle – i.e. put money into retail stocks when the market is bullish and move that money into more stable industries when the market is bearish.
This is relatively easy to do as the economy moves in a reasonably predictable pattern of boom to bust and back again. Certain sectors thrive or suffer depending on the stage of the economy. Investors should anticipate the boom stage in order to invest in retail stocks using sector rotation – retail thrives during the boom when expansionary policies boost consumer demand.
Where can I learn more?
For more information about retail stocks, and other key financial concepts, check out our full course page. Our various courses cover everything you need to know about stocks and investing.
Invezz is a place where people can find reliable, unbiased information about finance, trading, and investing – but we do not offer financial advice and users should always carry out their own research. The assets covered on this website, including stocks, cryptocurrencies, and commodities can be highly volatile and new investors often lose money. Success in the financial markets is not guaranteed, and users should never invest more than they can afford to lose. You should consider your own personal circumstances and take the time to explore all your options before making any investment. Read our risk disclaimer >