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Surprising lessons for investors this Cyber Monday

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Investors are being urged to look beyond retail stocks this Cyber Monday.

Investors are being warned not to get sucked into the short-term hype of major sale events such as Cyber week and instead focus on changing underlying trends, an industry expert reveals.

As consumers go mad for the latest bargains investors should instead be looking at the trends.

At least that is the advice from Saxo's Australian market strategist Jessica Amir who told Finder the big winners might not be from the investments you think.

"Ultimately, remember, earnings, earnings upgrades, cashflow and revenue growth drive share price growth," she said.

"Hype can only get you so far, often hype (meme stocks) can experience short lived rallies."

Think beyond retail

Surprisingly, Amir urges investors to look beyond retailers this Cyber week.

Even though the sales will be made with these businesses.

"I encourage people to think beyond retail – what other stocks could benefit and are in growing industries (logistics) and could benefit from the overarching thematic taking place (for example, the move to online shopping)," she said.

"So perhaps look beyond hype and look for quality companies with strong balance sheets that do well regardless of spot sales."

She notes, for example, investors that are interested in online retail as a growing sector could look at the companies that will grow because of the trend.

"Consider looking at Qube (QUB) the shipping port company or WiseTech (WTC) the logistics tech company. Or you could also look at Brambles (BXB) the global pallet business," Amir explains.

Are gains still to be made in consumer discretionary?

Consumer discretionary has been one of the big winners this year.

In fact, the sector has grown 21% compared to the market's 10% year-to-date growth.

But that rally has largely been based on changing circumstances during the pandemic.

"The rally in consumer spending stocks has been fuelled by the rise of online shopping amid the shift to working from home, higher incomes, record high savings rates and at-home boredom as well taking its toll on purse strings," she said.

As such Amir notes that from a technical perspective, cyclicals are on a downward trend.

3 factors driving down cyclicals

Amir explains that the sector could be hurt by fundamental shifts in the market.

She notes 3 of the main factors working against the sector:

  1. The sector has taken a haircut falling 1.3% this month as we are living through a high inflation environment (petrol and food prices are at record highs).
  2. Plus demand for shiny consumer goods has slowed due to the global supply issues – lack of supply from Vietnam, high petrol/freight prices from record high fuel and shipping delays due to skyrocketing demand for online goods.
  3. We are also living through a huge global shift in government policy (markets are pricing in interest rate rises next year).

"So if you are a long term investor, you could have your day to pick low hanging fruit – and buy those stocks you like that will grow over the long-term," Amir concludes.

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