Costco Wholesale Corporation (COST-Q)

EPS of $3.42 beat estimates of $3.28. Sales of $53.6B slightly missed estimates of $54.26B. Costco's top-line growth in fiscal 4Q may be driven more by traffic as the average basket size declines, though same-store sales excluding fuel and foreign exchange face tough comparisons. Food and sundries are categories of strength. Management expects inflation to moderate in 4Q, though lower demand for big-ticket items like furniture and electronics remains a headwind that will persist. The company discontinued its charter shipping activities in 3Q, resulting in a non-recurring charge that's weighing on profit. Core merchandise margin may be pressured in fiscal 4Q from higher costs and lower sales of higher-margin discretionary items. Investors liked the results, and the stock remains one that could still do well in a recessionary environment. Valuation is certainly up there at 35X earnings, but it has never been a cheap stock. 
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She's hesitant, because it always trades at a premium multiple. Pretty good performer long-term. Loyal customer base.

Still in his portfolio. Extremely strong renewal rates. Strong buying power. Still expecting 9-11% annualized earnings growth. Bit of a premium at 33x forward PE. Leadership name. Consumer staple, could do well in market softness.

Has been margin pressure. Big ticket items are seeing pressure but inflation is slowing. Likes it.

No qualms buying it here. Expensive, as it has been every day he's looked at it for the last 15 years. Superlative retailer. If you have a 2-3 year time horizon, rare that you'd lose money on an investment like this.

Current share price high but is excellent business.
Has since sold shares which was a mistake.
Great company with excellent long term prospects. 

It just reported weakness in sales, hard goods and furnishing especially. Shares fell $11 yesterday. But they have a track record of selling quality products at good prices. it's well-run and share weakness won't last that long. He's long owned this and still likes it.

Williams is bullish, based on historic market patterns, specifically 2009 when markets bottomed then bounced after the 2008 crash. In 2008 and 2022, the Nasdaq was much weaker than the Dow and S&P, though root causes are very different. In 2009, the market bottomed and went on a multi-year run. 2023 won't necessarily repeat that recovery, but if this pattern continues, it will be good for tech. Williams notes that major rallies and declines happen in the same times of the year. He sees these patterns in the S&P, Dow and Nasdaq charts historically back to 1962-3, which sees monster moves higher. He sees Easter rallies in retail between late March and early April. The leader here is Costco. The chart shows Costco and Walmart bottoming first among the big box retailers then recovering first. Costco rallies 75% of the time in this point of the cycle, lasting three months. Costco is coming out of a seasonally weak period with lower lows in March vs. the start of the year. But in 2023, Costco is doing better than its seasonal pattern.

There's evidence of the consumer trading down, and they had a solid quarter. Shares are up 7% YTD. Has a concern of weakening in the lower-end consumer, though.

Attractive, but always too expensive given the growth rate. Trades at a 35x multiple. Business model is highly predictive, where 80-90% profit comes from membership fees. But this is priced into the stock. Once economy improves, expect a membership fee increase.

The stock has been sideways for several months, but the stock is resilient through past cycles, so he likes it. A retail you want if there's a recession.

He sold it in late January. It was trading at a high 33x and growth was slowing. Free cash flow margins were cut in half. They do have a loyal following, but they can't sustain price increases. He doesn't want to own big-box retail and prefers luxury.

He doesn't consider them big-box retail, because they have a unique brand. Can't see more competition coming besides Walmart. He'd loved to buy it when the PE declines, like to 25x. Incredible management.

SS sales are still up 5%, but they missed on large discretionary items which is consistent with Walmart. Member renewal rates are still over 90% globally though. Management's execution commands a premium multiple.

It reports Thursday. It has a bad habit of declining on any news, even good, and it will be worse because we're in a retail bear market. Strong stomachs can buy this if shares fall after the quarter.