|New Threads Only:|
|New Threads & Replies:|
Forum List » Value Ideas and Strategies|
Share and discuss value investing ideas and investing strategies.
Costco: A Long-Term Investment That You Shouldn’t Miss
Posted by: tyokunbo (IP Logged)
Date: June 2, 2014 10:08PM
Costco (COST) operates membership warehouses. It offers products in a variety of merchandise categories. It offers appliances, electronics, automobile supplies and other consumer products. Costco also operates gas stations, pharmacies, food courts, travel businesses and hearing-aid centers. As of March 6, 2014, Costco operated 649 warehouses. This includes 462 warehouses in the U.S. The company also sells its products through online channels. It was founded in 1976 and is based in Issaquah, Wash.
Costco also provides business and gold star membership services. In the third quarter, total sales were up 7% to $25.2 billion. This compares to $23.5 billion for the same period in 2013. The company’s operating income came in at $734 million, higher by $12 million from last year’s $722 million. Costco’s renewal rates have continued to tick up. Its business members at the end of the third quarter were 94.4% from 94.3% renewal rates three months earlier. The company, however, expects its capital expenses for the entire year to come in at about $2.2 billion compared to last year’s expenditure of $2.1 billion. Its quarterly sales were also negatively impacted by gas price deflation.
In the first half of fiscal 2014, the company closed its Acapulco location due to damages caused by a hurricane. It then opened many new locations. In the third quarter, Costco opened two new locations in Louisiana and Texas.
Costco has also re-platformed and added mobile apps to its advertising effort. The company combined some of its e-commerce merchandising buying efforts with some of its line efforts. It added a few categories like apparel, some limited apparel items, and some limited beauty products. To improve the timing of shipments, it started to ship out of more than one depot.
Costco faces competition from Target Corporation (TGT), Wal-Mart Stores (WMT) and the privately held BJ’s Wholesale Club. Compared to its rivals, Costco offers quality merchandise, good prices and occasional surprises. It continues to enjoy strong renewal sales and is committed to a policy of international expansion.
Wings Across the World
The company’s international stores in seven countries have proven that its formula works just as well with consumers outside the U.S. Costco operates 87 warehouses in Canada, 33 in Mexico, 25 in the UK, 18 in Japan, 10 in Taiwan, nine in Korea and five in Australia.
A Glance at Asia
Costco opened a location each in Korea and Japan in the last quarter. It plans to add more stores to its operations in Taiwan. In addition, Costco plans to open online stores in China, but the company is keen to avoid the huge costs and high risk elements that made some of its competitors to back out of the Chinese market.
Costco has opened its first store in Spain. It expects to open another store in the UK through the end of fiscal 2014 on Aug. 31. Costco combines its UK operations with the management of an online store.
On a Concluding Note
Costco began its recent repurchasing activities on March 7. It has expended $183.6 million since the program began. To ensure a competitive advantage over its rivals, it is innovating and investing in value-added activities. This could bring even more value to shareholders. Costco has enough room for its international expansion. It will provide a pocketful returns to investors in the near future.
Stocks Discussed: COST, TGT, WMT,
Re Costco A Long-Term Investment That You Shouldn t Miss
Posted by: Dr. Paul Price (IP Logged)
Date: June 3, 2014 10:28AM
You said not one word about Costco's current price or what you think it is worth.
Do you not think those are relevant parts of your discussion?
Stocks Discussed: COST, TGT, WMT,
Disclaimers: GuruFocus.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on GuruFocus.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The gurus may buy and sell securities before and after any particular article and report and information herein is published, with respect to the securities discussed in any article and report posted herein. In no event shall GuruFocus.com be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on GuruFocus.com, or relating to the use of, or inability to use, GuruFocus.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. The gurus listed in this website are not affiliated with GuruFocus.com, LLC. Stock quotes provided by InterActive Data. Fundamental company data provided by Morningstar, updated daily.