In today's market, the retail space is fraught with risk. High energy prices have crimped consumers' disposable income, and the housing slump has dented household formation -- a backbone of retail sales growth. Meanwhile, sluggish job growth is sending a signal that a U.S. economic slowdown is underway.

Hence, if one is to consider a retail play, it should be a well-capitalized company, with a demonstrated business model, and Costco (NASDAQ: COST) fits that bill.

Costco helped define the 'get it for wholesale' space and now operates 520 warehouses, primarily in the United States and Canada. (The company operates 30 stores in Mexico via a joint venture.)

Costco's philosophy differs from its competitors in that it focuses on a limited selection of national-brand merchandise and some private-label products. That laser focus, combined with buying direct from manufacturers and the company's bare-bones warehouses, enables the company to operate profitably despite smaller gross margins. The Reuters F2008/F2009 EPS consensus estimates for COST are are $2.98/$3.39.

In today's world, people rarely carry large amounts of cash on them. People have credit cards for large purchases or even debit cards to access their checking accounts. ATM machines are on every urban street corner in America. But what happens when you're not at home in that urban setting? What do you do if you're on vacation?

I recently went to the Caribbean with my wife. We knew that most places would accept our cards but we questioned the exchange rate. Eastern Caribbean money isn't that strong in comparison to the U.S. dollar ($2.60 EC to $1 U.S.) and we knew that our credit cards would charge a service fee for purchases made in EC dollars. My wife, whom I consider a "world traveler," has always gone with the traveler's checks and prepaid card route. She would cash the checks in at the hotel and use prepaid cards so she wouldn't put her personal accounts at risk. I always used my credit card on vacation. Before our trip, I was sent to the bank to pick up a pair of prepaid cards and some traveler's checks.

The July issue of Money magazine has a great article regarding the best way to keep exchange costs to a minimum with today's weak dollar.

I found out she was completely wrong - a month too late.