Last week, Costco Wholesale Corporation (NASDAQ:COST) released its quarterly earnings which missed analyst expectations despite still showing strong sales growth from the previous year. While many retailers have struggled to compete with Walmart Inc (NYSE:WMT) and online giant Amazon.com, Inc. (NASDAQ:AMZN), Costco has proven to be a formidable opponent.
Rumblings that Toys R Us may soon be exiting the industry will only put investors more on edge when it comes to looking at companies that rely on in-store sales. However, Costco’s shopping experience has resonated with customers and proven to still be popular among its members.
In the past year, the stock price has risen 14% and in five years it has grown more than 80%. It is a great blue-chip stock to add to your portfolio and its low-cost model will ensure that it is able to stay competitive even while others are struggling to stay afloat.
What separates Costco from its competitors is the “treasure hunt” experience that the store creates for its shoppers, which is quite unlike any other. Because the company focuses on low-cost products, there is often a lot of variability as to the items that make it into its warehouse, which lures customers back on a recurring basis to see what’s new, which generates a lot of recurring revenue.
It’s unique shopping experience gives it an edge over Amazon, particularly for those customers that still like to look and feel the products they are wanting to purchase.
Despite the earnings miss, Costco’s business model is one that still has a lot of potential and that makes it a great stock to hold for many years to come.
