Costco looks good for consumers, investors
Yet Wall Street fails to appreciate the chain's potential for growth.
Net income for the fiscal fourth quarter was $609 million, or $1.39 per share, up 27% from $478 million, or $1.08, a year earlier, fueled by gains in sales of private-label goods.
Costco, whose shares have risen about 20% this year, has room to run even though the stock is trading above its 52-week price target of $86.50. The chain has 608 locations and plans to open as many as 14 additional ones before the end of the year. There are 439 Costcos in the U.S. and Puerto Rico, 82 in Canada and 32 in Mexico, so there are plenty of opportunities for expansion. Sales may continue to grow in existing stores as well.
Consumers are feeling more confident as the presidential election nears, though they are hardly in the mood to spend as they did before the Great Recession. People want value for their money, and that's what they get at Costsco. My family has shopped there for years and has been impressed by the quality of the company's Kirkland products. Unless the economy tumbles into a black hole, Costco will be just fine.
The chain appeals to many different types of consumers because the breadth of its products and services is remarkable. Small businesses can buy office supplies. Families, particularly large ones, can find great deals on perishable goods. People can also get great deals on big-ticket items like jewelry and big-screen televisions. Costco also offers travel services, as well as deals on birthday cakes and caskets. That last item is no joke.
Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter@jdberr.
COSTCO is the only big Box I buy from - they have the best customer service andthey pay attention to basics. The market organic foods and keep there workforce happy - you can see it ion the stores. They do not sell a large number of products and they do not preclude me shopping at smaller stores on a day to day basis.
They also have the best Tech support going. Their concierge service is wonderful.
And calling themselves Costco "Wholesale"? Are people who buy there so naive as to think they are paying wholesale prices? What price do they think Costco pays? WHOLESALE!
I did buy a camera there about two years ago that was a good deal. But, I have found that one can buy almost everything else on the Internet at comparable or even lower prices without the hassle of fighting the checkout lanes and parking issues. Now that Safeway sells discounted gasoline, it is another reason not to travel the extra distance to Costco. I get my meds at Safeway or Bartell's and they are at a discount, too, on my plan.
If you have a family, it may be a good deal as you can buy in quantity--and the quality of the foodstuffs are high. But, unless you have a large freezer, or lots of friends to share with, the model doesn't work for a single man. So, I am dropping my membership this year. The extra expense is not worth it to me.
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