We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Costco (COST) Stock Offers Enough Reasons to Stay Invested
Read MoreHide Full Article
Costco Wholesale Corporation (COST - Free Report) , an “all-weather” stock, has withstood multiple market gyrations and delivered returns to investors. A resilient business model enables it to gain market share and generate profits. This operator of membership warehouses has exhibited a decent run on the bourses and has outpaced the industry over the past year.
Shares of this Zacks Rank #3 (Hold) company have appreciated about 40.8% in the said period compared with the industry’s rise of 14%. The stock attained a 52-week high of $683.7 in the last trading session. Given its VGM Score of B, Costco has ample scope to attain new highs. Additionally, for the current fiscal year, the Zacks Consensus Estimate suggests a 4.3% rise in sales and a 7.4% increase in earnings per share.
Striking the Right Chord With Consumers
Costco continues to be one of the dominant warehouse retailers based on the expanse and quality of merchandise offered. A customer-centric approach, strategic pricing, merchandise initiatives and an emphasis on memberships have helped Costco post consistent sales growth.
Costco’s net sales increased 9.9% to $26.15 billion for the retail month of December from $23.8 billion last year. This followed an improvement of 5.1% and 4.5% witnessed in November and October, respectively. Comparable sales for the five-week period ended Dec 31, 2023 advanced 8.5%. This followed an increase of 3.5% and 3% registered in November and October, respectively.
The company's distinctive membership business model and pricing power set it apart from traditional players. Low-to-middle-income consumers have preferred discount stores over conventional retailers to meet their day-to-day needs. We believe a growing customer base and high renewal rates should fuel sales.
Image Source: Zacks Investment Research
Steadily Adopting the Omnichannel Mantra
Costco is gradually adopting the omnichannel mantra to provide a seamless shopping experience. Its acquisition of Innovel Solutions, a leading provider of third-party end-to-end logistics solutions — now called Costco Logistics — has boosted its e-commerce capabilities and enabled it to sell "big and bulky" items.
The company has been gradually expanding its e-commerce capabilities in the United States, Canada, the U.K., Mexico, Korea, Taiwan, Japan and Australia.
Enhancing Footprint
Costco’s expansion strategy looks pretty impressive. The company remains committed to opening new clubs in the domestic and international markets. In our view, Costco’s diversification strategy is a natural hedge against risks that may arise in specific markets.
As of Jan 4, 2024, Costco operates 871 warehouses, including 600 in the United States and Puerto Rico, 108 in Canada, 40 in Mexico, 33 in Japan, 29 in the United Kingdom, 18 in Korea, 15 in Australia, 14 in Taiwan, five in China, four in Spain, two in France and one each in Iceland, New Zealand and Sweden.
We foresee improvement in membership fees as new warehouse openings ramp up. Membership fees increased 8.2% to $1,082 million in the first quarter of fiscal 2024. The company ended the quarter with 72 million paid household members.
Enough Liquidity
Costco’s sturdy balance sheet equips it to deal with cyclical downturns and tap growth opportunities. Solid cash flow generation allows it to raise dividends consistently. The company’s cash & cash equivalents were $17,011 million at the end of fiscal 2024.
Costco has always been a favorite pick for investors who are seeking both steady income and growth. This Issaquah, WA-based company, with a strong history of dividend payments as well as sound fundamentals, provides a hedge against any odd swings in the stock market. The company announced a special cash dividend of $15 per share in the first quarter of fiscal 2024, marking its fifth special dividend in the last 11 years.
The Zacks Consensus Estimate for Target’s current financial-year sales suggests growth of 38.5% from the year-ago reported figure.
Sysco Corporation, a food and related products company, currently carries a Zacks Rank #2. SYY delivered a back-to-back positive earnings surprise in the past two quarters.
The Zacks Consensus Estimate for Sysco’s current fiscal-year sales and earnings suggests growth of 4.1% and nearly 8%, respectively, from the year-ago reported numbers.
Ollie's Bargain, America’s largest retailer of closeout merchandise and excess inventory, currently carries a Zacks Rank #2. Ollie's Bargain has a trailing four-quarter earnings surprise of 7%, on average.
The Zacks Consensus Estimate for Ollie's Bargain’s current financial-year sales and earnings suggests growth of 14.9% and 74.7%, respectively, from the year-ago reported numbers.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Costco (COST) Stock Offers Enough Reasons to Stay Invested
Costco Wholesale Corporation (COST - Free Report) , an “all-weather” stock, has withstood multiple market gyrations and delivered returns to investors. A resilient business model enables it to gain market share and generate profits. This operator of membership warehouses has exhibited a decent run on the bourses and has outpaced the industry over the past year.
Shares of this Zacks Rank #3 (Hold) company have appreciated about 40.8% in the said period compared with the industry’s rise of 14%. The stock attained a 52-week high of $683.7 in the last trading session. Given its VGM Score of B, Costco has ample scope to attain new highs. Additionally, for the current fiscal year, the Zacks Consensus Estimate suggests a 4.3% rise in sales and a 7.4% increase in earnings per share.
Striking the Right Chord With Consumers
Costco continues to be one of the dominant warehouse retailers based on the expanse and quality of merchandise offered. A customer-centric approach, strategic pricing, merchandise initiatives and an emphasis on memberships have helped Costco post consistent sales growth.
Costco’s net sales increased 9.9% to $26.15 billion for the retail month of December from $23.8 billion last year. This followed an improvement of 5.1% and 4.5% witnessed in November and October, respectively. Comparable sales for the five-week period ended Dec 31, 2023 advanced 8.5%. This followed an increase of 3.5% and 3% registered in November and October, respectively.
The company's distinctive membership business model and pricing power set it apart from traditional players. Low-to-middle-income consumers have preferred discount stores over conventional retailers to meet their day-to-day needs. We believe a growing customer base and high renewal rates should fuel sales.
Image Source: Zacks Investment Research
Steadily Adopting the Omnichannel Mantra
Costco is gradually adopting the omnichannel mantra to provide a seamless shopping experience. Its acquisition of Innovel Solutions, a leading provider of third-party end-to-end logistics solutions — now called Costco Logistics — has boosted its e-commerce capabilities and enabled it to sell "big and bulky" items.
The company has been gradually expanding its e-commerce capabilities in the United States, Canada, the U.K., Mexico, Korea, Taiwan, Japan and Australia.
Enhancing Footprint
Costco’s expansion strategy looks pretty impressive. The company remains committed to opening new clubs in the domestic and international markets. In our view, Costco’s diversification strategy is a natural hedge against risks that may arise in specific markets.
As of Jan 4, 2024, Costco operates 871 warehouses, including 600 in the United States and Puerto Rico, 108 in Canada, 40 in Mexico, 33 in Japan, 29 in the United Kingdom, 18 in Korea, 15 in Australia, 14 in Taiwan, five in China, four in Spain, two in France and one each in Iceland, New Zealand and Sweden.
We foresee improvement in membership fees as new warehouse openings ramp up. Membership fees increased 8.2% to $1,082 million in the first quarter of fiscal 2024. The company ended the quarter with 72 million paid household members.
Enough Liquidity
Costco’s sturdy balance sheet equips it to deal with cyclical downturns and tap growth opportunities. Solid cash flow generation allows it to raise dividends consistently. The company’s cash & cash equivalents were $17,011 million at the end of fiscal 2024.
Costco has always been a favorite pick for investors who are seeking both steady income and growth. This Issaquah, WA-based company, with a strong history of dividend payments as well as sound fundamentals, provides a hedge against any odd swings in the stock market. The company announced a special cash dividend of $15 per share in the first quarter of fiscal 2024, marking its fifth special dividend in the last 11 years.
3 Stocks Looking Red Hot
Here, we have highlighted three better-ranked stocks, namely Target (TGT - Free Report) , Sysco Corporation (SYY - Free Report) and Ollie's Bargain (OLLI - Free Report) .
Target operates as a general merchandise retailer. It currently has a Zacks Rank #2 (Buy). TGT has a trailing four-quarter earnings surprise of 30.8%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Target’s current financial-year sales suggests growth of 38.5% from the year-ago reported figure.
Sysco Corporation, a food and related products company, currently carries a Zacks Rank #2. SYY delivered a back-to-back positive earnings surprise in the past two quarters.
The Zacks Consensus Estimate for Sysco’s current fiscal-year sales and earnings suggests growth of 4.1% and nearly 8%, respectively, from the year-ago reported numbers.
Ollie's Bargain, America’s largest retailer of closeout merchandise and excess inventory, currently carries a Zacks Rank #2. Ollie's Bargain has a trailing four-quarter earnings surprise of 7%, on average.
The Zacks Consensus Estimate for Ollie's Bargain’s current financial-year sales and earnings suggests growth of 14.9% and 74.7%, respectively, from the year-ago reported numbers.