Gordon ReidCostco Wholesale CorporationCOSTDON'T BUYSep 17, 2025

World's third-largest retailer. High traffic, repeat business, superior same-store sales growth in high single digits. Likes the recurring membership fees, with ~92% retention rate. Likes the procurement clout and narrow assortment of goods. Pretty good gross margins of 11%, and ~30% ROE. 

Seems to trade at a high multiple, and this scares people. But it's compounded at 17-18% since the IPO in 1985. Any day that ends in "y" is a good day to buy. Yield is 0.64%.

Has traded at a high valuation pretty much since it went public. Good luck trying to pick a perfect valuation entry point. He invests in companies that can invest cashflows at high rates of return over decades. Stealing market share from low- and middle-end grocery stores. Adding services, such as Medicare plans in the US. Same-store sales growth 7-8% a year.

Deserves to trade at a high multiple because of business durability over the long term. Yield is 0.60%.

A better growth name than ATD. Take a look.

It's one of the best business on Earth. Customers and employees love Costco. They are opening new stores, so there's ample runway. However, the PE of around 44x is high. Same-store sales growth has slowed slightly. But it's good to hold long term.

It got too expensive, and now trades at 46x PE. If it falls to 45x expects a major move higher. Has long owned this.

He sold it last October at $1015. The chart began to break down. 

Inflation is really hard out there. Real pressure to save money, and this name is among the low-cost providers. Sees it continuing to do well, despite a difficult environment for so many people.

High valuation but is growing double digits, which it should do so for years. They have the lowest prices of products compared to peers. A lot of room to expand location. A great business model. He will hold this forever.

Buy some now at 47x PE, then more at 45x. Likes it. Is up 13% this year

A buy-and-hold forever. Omnichannel retailer, as it's increasingly seeing acceleration in e-commerce and delivery channels.

He wrote an in-the-money call at $985. It was trading over $1,000 yesterday down to $950 today. He covered half the position and just closed it out at $5. He netted a $22 profit. Earnings were good, as expected. You can add to it at these levels, despite the high PE.

She once owned it for many years, but the chart is now broken. People are concerned that their growth and high multiple are in jeopardy.

Both great companies, but both very expensive. COST is over 50x PE, and WMT's in the 40s. Fairly low-margin model. Reliant on the consumer, and everyone's affected when that consumer is struggling.

WMT reported today. Earnings were OK, but projections on future quarters were tough. High fuel prices were highlighted.

No valuation concerns, as it's been expensive every day he's looked at it over 30 years. Compounded shareholder total return of 17.5% since its IPO. Third-largest retailer in the world. Procurement clout and supply-chain efficiencies produce gross margins of 11%. Still expanding store count. Periodically increases membership fees. Superior same-store sales performance driven by traffic and basket size.

Lots of ways to win. Yield is 0.59%.

The only consumer staples he owns are COST and KO, which are still growing.