Retail Stocks To Buy [Or Sell] Right Now: Costco Wholesale Corporation
Costco (COST Stock Report) has had a turbulent year. However, the impressive thing is that it has recovered its share value in the aftermath of the market crash. Today, it has a year-to-date increase of 18%. Surprisingly as well is the fact that the S&P 500 is up by about 3% so far, so Costco has managed to outperform the S&P 500. This is an indication that Costco’s strong fundamentals have shielded it from the brunt of the stock market crash.
The company reported its fiscal fourth quarter in September and has exceeded expectations. Net sales have jumped 12.5% year-over-year at $52.3 billion. This is Costco’s highest increase in 3 years. This result shows that it outperformed its competitors like Walmart. Through its e-commerce division, sales have jumped 91% during this quarter. Its membership fee income grew by approximately 5%. This increase in income comes with a growing user base and higher penetration of Costco’s premium subscription offering.
In September, 12.6 million people filed for unemployment benefits in the US alone. This would inadvertently make people depend on affordable goods and necessities. In turn, more people will turn to retailers like Costco. After all, Costco has come to be known as having fairly priced goods. The upside to the pandemic is that it is positively affecting Costco’s sales growth. Lower spending on restaurants and travel is boosting demand for food at Costco. In a time of economic uncertainty, Costco is still going strong when many retailers have gone out of business. With that, it stands to gain a larger market share in retail. This primes Costco for significant long-term growth opportunities and as a retail stock to buy.
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