"While many firms are struggling to survive, a lucky minority are built to weather the storm better," says growth stock specialist Karim Rahemtulla. In Xcelerated Profits Report, he eyes Costco Wholesale (NASDAQ: COST).
"Thanks to rising inflation and unemployment, coupled with a beaten-up economy, many retailers are braced for a harsh new reality this holiday season.
"Consumers have much tighter budgets and are cutting back on whatever they can. And that's where some 'one-stop' retailers like Costco can really take advantage.
"Although customers are more likely to avoid the electronics and other non-necessity stocking sections of the store these days, they still need to eat.
"So while other non-food departments are seeing a sales slowdown, Goldman Sachs recently reported that Costco is likely to enjoy strong food sales, which offset that.
"Goldman also noted that Costco boasts a strong balance sheet, with almost $3.3 billion in cash on the books, plus ample liquidity - factors that could encourage management to implement a stock buyback program.
"Compared to other retailers who are flat-out dreading this holiday season, that puts Costco in a strong position.
"And because the store has such a diverse range of products, all under one roof and available at bargain prices, Costco is one firm better prepared to ride out what could be a brutal season for retailers."
Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
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Reader Comments (Page 1 of 1)
11-29-2008 @ 5:12AM
al coholic said...
Here is the true story on Costco.
If you spend two thousand dollars a year at Costco your $100 annual fee means you spent 5% more than you thought you did on every item.
When you buy a lot of things in bulk they often spoil or get wasted. Also the natural tendency of a lot of people is to binge on surplus junk food.
If you are like most people you will buy things at Costco you really don't need because of the "warehouse" mentality they depend on to hook you.
If you are a careful shopper you can buy most of the goods you have to buy gigantic amounts of at Costco elsewhere for nearly the same price in quantities more suited for the average family.
11-29-2008 @ 10:18AM
William said...
Costco is great! A gallon of milk is $2.50, I can buy 4 flank steaks for $25, if you have that $100 membership a percentage is given back to you every year. This year I got back $80; so my membership costs were $20. Costco sells good food at great prices. Thank God for Costco.
12-01-2008 @ 11:52AM
Kaleena said...
I have been a Costco shopper for many years and my husband is employed there as well.Costco is a great company,not just to their members but also to their employees.There starting wage is much higher than at other retailers.I believe it is now at$11.00 per hour,at other places like Walmart,Target or other cgrocery store chains starting pay is either minimum wage or around $8.00 per hour.They also provide there employees with excellent benefits.My husband had an exceelent job as a salesman with a tool compnay but quit that job because the benefits they offered were no wehere near as good as Costco's.