Not all retail is created equal. This is a fact many investors seem to be buying into, with shares of specific retailers such as Costco Corporation (NASDAQ:COST) holding up much better than other retailers in sectors such as fashion, electronics and mall-based retail outlets. In this article, I will highlight the reasons why Costco remains a top pick of mine in this beaten up sector today.
From an operating metrics standpoint, Costco is world class in providing investors with outsized returns relative to its peers. Among all the statistics from the company’s recent earnings report, the metric that stood out to me was Costco’s overall revenue growth via total comparable sales. This metric signifies the raw growth Costco has seen across its locations in a cleaner way than earnings or other metrics that could be adjusted. This past quarter, Costco saw total comparable sales rise 13.2% versus estimated 10.4% rise, blowing away expectations and signaling dominance in the bulk grocery retail segment.
Any company that is able to post a double-digit growth rate in the middle of a pandemic ought to turn heads. This is especially true for companies outside of the tech sector. Costco’s value proposition has never been stronger. I expect continued outperformance by Costco over the long run, due mainly to its unique and difficult to replicate business model as well as at the scale Costco operates at internationally.
For investors looking for a stock to buy on dips moving forward, I’d suggest adding Costco to that list now.
Invest wisely, my friends.
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