The extreme levels of volatility we've seen of late in financial markets has created a scenario which has revealed some price dislocations amongst certain high-quality stocks. This has created buying opportunities and value traps, simultaneously.
Differentiating between the two seems to be the trick. In this article, I'm going to discuss why Costco Corporation (NASDAQ:COST) should be considered a company trading at opportune levels, and should therefore be on everyone's watch list right now.
Off the top, I think it's important to point out that Costco is a sector leader as far as consumer staples go. Fundamentally speaking, Costco boasts some of the best metrics in the sector, with key statistics like same store sales growth at prestigious levels for a remarkably long track record of outperformance.
Costco margins and organic growth profile have made this company a top pick of mine for quite some time. The current macroeconomic environment stemming from the coronavirus outbreak, I think, actually works in Costco’s favour, relative to the company’s competition.
Costco was able to post insane cash flow numbers last quarter ($3.1 billion U.S.) and remains the industry standard with respect to cost management and margin generation. The company's private label brand, Kirkland, has continued to grow at a rapid pace and eat up market share.
Costco consumers continue to see an increased value proposition from this private label brand like never before. Consumers are buying into the "no-name" offering Costco has put forward to a degree other retailers have broadly tried to replicate, but have largely failed to do so.
Invest wisely, my friends.
