Costco Wholesale

COST-Q

NASDAQ:COST

308.31
1.25 (0.40%)
Costco Wholesale Corporation, trading as Costco, is the largest American membership-only warehouse club.
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Analysis and Opinions about COST-Q

Signal
Opinion
Expert
TOP PICK
TOP PICK
June 29, 2017

The world’s 2nd largest retailer by revenue, and operate over 700 stores and warehouses globally. They have 90 million member cardholders. He doesn’t believe the acquisition of Whole Foods by Amazon (AMZN-Q) will change the game that rapidly for this company. Renewal rates are 90% in North America and 88% outside of North America. They need to improve their online revenues which are still in single digits. Dividend yield of 1.3%. (Analysts’ price target is $185.37.)

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The world’s 2nd largest retailer by revenue, and operate over 700 stores and warehouses globally. They have 90 million member cardholders. He doesn’t believe the acquisition of Whole Foods by Amazon (AMZN-Q) will change the game that rapidly for this company. Renewal rates are 90% in North America and 88% outside of North America. They need to improve their online revenues which are still in single digits. Dividend yield of 1.3%. (Analysts’ price target is $185.37.)

COMMENT
COMMENT
June 28, 2017

Retailers in general have been pretty stressed. They continue to miss earnings, and are hurting because of Amazon (AMZN-Q). This one is not quite in the same category as they have a bit of a moat. They are the leader in the membership model of large packaging and deeper discounting. Trading at a pretty good valuation. Good ROE’s up 22%. OK on a PE basis. Thinks this will be one of the survivors.

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Retailers in general have been pretty stressed. They continue to miss earnings, and are hurting because of Amazon (AMZN-Q). This one is not quite in the same category as they have a bit of a moat. They are the leader in the membership model of large packaging and deeper discounting. Trading at a pretty good valuation. Good ROE’s up 22%. OK on a PE basis. Thinks this will be one of the survivors.

HOLD
HOLD
June 20, 2017

Bricks and mortar retail in general has been under pressure all year. He has focused on Internet retailers such as Amazon (AMZN-Q). However, he does have a small holding on this one. It has a pretty defendable position in the big box club stores. Just dropped 10%, and he is not happy to see anything drop that much. This is basically trading right on its 200-day moving average. When Amazon acquired Whole Foods, every retailer within shooting distance, got taken out to the woodshed. He would use a 200-day moving average as a Stop. In the short run, there was a knee-jerk rejection, and some companies will likely rise out of that. Feels this company is less likely to be hurt than some of the other big grocers.

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Bricks and mortar retail in general has been under pressure all year. He has focused on Internet retailers such as Amazon (AMZN-Q). However, he does have a small holding on this one. It has a pretty defendable position in the big box club stores. Just dropped 10%, and he is not happy to see anything drop that much. This is basically trading right on its 200-day moving average. When Amazon acquired Whole Foods, every retailer within shooting distance, got taken out to the woodshed. He would use a 200-day moving average as a Stop. In the short run, there was a knee-jerk rejection, and some companies will likely rise out of that. Feels this company is less likely to be hurt than some of the other big grocers.

BUY
BUY
June 5, 2017

He likes it. A good bottom line and trading at a decent valuation, close to breaking out. It is close to hitting an all time high. People love the experience and they think they are getting a deal.

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He likes it. A good bottom line and trading at a decent valuation, close to breaking out. It is close to hitting an all time high. People love the experience and they think they are getting a deal.

COMMENT
COMMENT
May 26, 2017

A great franchise. Doing very well in North America and in their expansion plans elsewhere. Has never owned this. Has a forward PE ratio of about 28-29 times, which is at the high point of its 10-year historical average. That concerns him a little. It has a growth rate of about 10%, so you are looking at a stock that is rather expensive when looking at the PEG ratio. It continues to move well in price action, but from a valuation standpoint, you want to be careful and look at other names instead.

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A great franchise. Doing very well in North America and in their expansion plans elsewhere. Has never owned this. Has a forward PE ratio of about 28-29 times, which is at the high point of its 10-year historical average. That concerns him a little. It has a growth rate of about 10%, so you are looking at a stock that is rather expensive when looking at the PEG ratio. It continues to move well in price action, but from a valuation standpoint, you want to be careful and look at other names instead.

COMMENT
COMMENT
May 10, 2017

What you need to know when buying a stock in the retail sector is how they are going to be affected by Amazon (AMZN-Q). Amazon is changing the world as we know it. Costco is a company that can and does compete with Amazon on price. He likes this company, but there is another name he likes better. (See Top Picks.)

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What you need to know when buying a stock in the retail sector is how they are going to be affected by Amazon (AMZN-Q). Amazon is changing the world as we know it. Costco is a company that can and does compete with Amazon on price. He likes this company, but there is another name he likes better. (See Top Picks.)

DON'T BUY
DON'T BUY
April 17, 2017

The valuation is not the greatest thing ever. They have a most beautiful business model. There is still lots of runway for them to grow. He cannot pay 35 times earnings, however.

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The valuation is not the greatest thing ever. They have a most beautiful business model. There is still lots of runway for them to grow. He cannot pay 35 times earnings, however.

DON'T BUY
DON'T BUY
April 6, 2017

A great franchise, but valuations are a bit stretched at almost 28X forward earnings with a 10% growth rate. This gives you a 2.7 PEG ratio, which is a bit expensive. They are raising membership fees. There is deflation in food as well as in electronics, which is a challenge for a name like this.

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A great franchise, but valuations are a bit stretched at almost 28X forward earnings with a 10% growth rate. This gives you a 2.7 PEG ratio, which is a bit expensive. They are raising membership fees. There is deflation in food as well as in electronics, which is a challenge for a name like this.

BUY
BUY
March 29, 2017

They have done quite well. They have an interesting business model. They make their money on memberships, not on margin. It is a bullish chart. It is a buy given their recent breakout.

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They have done quite well. They have an interesting business model. They make their money on memberships, not on margin. It is a bullish chart. It is a buy given their recent breakout.

COMMENT
COMMENT
March 16, 2017

This model is fantastic. Basically, they make nothing on the merchandise they sell and 100% of their profitability comes from membership fees. Retailers are out of fashion right now, especially brick and mortar ones, because of the new age of ordering online and e-commerce as well as border tax implications. Only about 25% of their merchandise comes from outside the US borders, so they are somewhat insulated. People pay up for it, so the PE is somewhere in the high 20s. If they continue doing what they are doing, a mid-20s multiple is reasonable. He would not be comfortable paying this multiple for his clients.

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This model is fantastic. Basically, they make nothing on the merchandise they sell and 100% of their profitability comes from membership fees. Retailers are out of fashion right now, especially brick and mortar ones, because of the new age of ordering online and e-commerce as well as border tax implications. Only about 25% of their merchandise comes from outside the US borders, so they are somewhat insulated. People pay up for it, so the PE is somewhere in the high 20s. If they continue doing what they are doing, a mid-20s multiple is reasonable. He would not be comfortable paying this multiple for his clients.

COMMENT
COMMENT
March 15, 2017

An outstanding business model. It is e-commerce resilient. The unit economics are very, very strong. A very durable moat type business. They make a ton of money on membership fees, and are about to increase them in July, which will be a nice earnings tailwind. However, it always comes back to what you want to pay for it. He is waiting for a better entry point. Dividend yield of about 1.1%.

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An outstanding business model. It is e-commerce resilient. The unit economics are very, very strong. A very durable moat type business. They make a ton of money on membership fees, and are about to increase them in July, which will be a nice earnings tailwind. However, it always comes back to what you want to pay for it. He is waiting for a better entry point. Dividend yield of about 1.1%.

COMMENT
COMMENT
March 14, 2017

One of the leaders in the low-cost space. Their margins run at about half of what their competitors do. That model only works if there is high turnover of your products. They have been successful in picking the right products, pricing them and moving them very quickly. The risk is, if you do get into a slowdown, there really isn’t any room to cut prices. They generate about 25% of revenue from membership fees, and with so many members, it is difficult to grow revenue. Membership fees are going up, which is a way to have that side of the business stay strong. Trading at about 29X Price to Earnings. For him, the dividend trajectory growth is not there, and trades too rich for him. Dividend yield of 1.1%.

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One of the leaders in the low-cost space. Their margins run at about half of what their competitors do. That model only works if there is high turnover of your products. They have been successful in picking the right products, pricing them and moving them very quickly. The risk is, if you do get into a slowdown, there really isn’t any room to cut prices. They generate about 25% of revenue from membership fees, and with so many members, it is difficult to grow revenue. Membership fees are going up, which is a way to have that side of the business stay strong. Trading at about 29X Price to Earnings. For him, the dividend trajectory growth is not there, and trades too rich for him. Dividend yield of 1.1%.

DON'T BUY
DON'T BUY
March 9, 2017

Pricey. Trading at 27X forward earnings with about a 10% growth rate. He would avoid this at this time. Some of the headwinds include needing to make investments in new stores, as well as some of the higher wages that they will need to start paying.

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Pricey. Trading at 27X forward earnings with about a 10% growth rate. He would avoid this at this time. Some of the headwinds include needing to make investments in new stores, as well as some of the higher wages that they will need to start paying.

WEAK BUY
WEAK BUY
February 27, 2017

If you have to own a retailer this would be one to look at. There is a small group of stocks that are surviving in retail. The whole industry is going through a change. But he thinks there are other areas in the market that look better. It pays a 1% dividend.

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Costco Wholesale (COST-Q)
February 27, 2017

If you have to own a retailer this would be one to look at. There is a small group of stocks that are surviving in retail. The whole industry is going through a change. But he thinks there are other areas in the market that look better. It pays a 1% dividend.

COMMENT
COMMENT
February 27, 2017

A retailer that continues to do very well. They had some hiccups in 2015 where they had some earnings hits. A low volatile name. Suffering a little bit of rotation problem right now, because people are getting excited about the more highflying names, but every time this pulls back, generally speaking it has been a good time to buy.

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Costco Wholesale (COST-Q)
February 27, 2017

A retailer that continues to do very well. They had some hiccups in 2015 where they had some earnings hits. A low volatile name. Suffering a little bit of rotation problem right now, because people are getting excited about the more highflying names, but every time this pulls back, generally speaking it has been a good time to buy.

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