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- Costco (NASDAQ:COSTS) has become a safe haven for investors.
- Buyers pay a premium over the sale and receive small dividends.
- The positivity of COST shares doesn’t seem to be coming to an end, making the purchase worth the effort.
I love Costco. I always am. It evokes fond memories of my late father, who took me to the then Price Club in the 1970s. I got my membership as soon as the company entered the market in Atlanta. Our monthly visits are a family ritual.
The question, however, is whether there is a limit. So far, investors have not found it. Shares of Costco entered on March 17 with a market capitalization of $ 241 billion in sales of $ 203 billion in 2021. That’s a huge premium. In contrast, Kroger (NYSE:KR) has a market capitalization of $ 40 billion in sales in 2021 of $ 135 billion. Walmart (NYSE:WMT) is worth $ 407 billion in sales of $ 572 billion.
Why stock Premium for COST?
Investors pay for Costco because of its perceived security. There seem to be websites for no other reason as the latest Costco news.
This is generally good news. Costco is expecting an opening 28 new stores this year and everyone could stand $ 100 million in stock. Members like me will eat a raising the price of membership this summer. When prices were finally raised, Costco’s net income closely followed membership income. In the last quarter, which ended Feb. 13, there was a profit 30% higher than fees.
Costco has $ 4 billion capital expenditure budget, and not everything goes to new stores. Costco has “don’t touch” supply chain, shopping with a pallet load and leaving consumers to break up bulk cargo themselves. It only supports 3700 storage units (SKUs), which is an incredibly low number that is easy to manage.
What’s next for Costco
There would usually be some cause for concern. Inflation is not just about rising commodity costs. It also means the growing expectations of investors who need growth to overcome it. But so far in the financial year 2022 Costco is implementing. Final growth in the first two quarters was 16%. The final growth was 23%.
Inflation can also cause problems for workers. But Costco has always paid more than its competitors. In addition, it is quietly improving its online presence. The company built its own shipping service, with sales up 22%. It mostly handles items that don’t fit your car, such as TVs and furniture. These are the buyers of the items I want to deliver – We can pick up our chickens from the roaster, thank you.
Then it’s here Costco Nextan alliance of 35 online retailers offering savings of about 20%. For now, the company only advertises this on its website. But there are more traders is addedso that could change.
Despite the premium share price, 12 of 16 analysts track Costco shares on Tipranks say buy. Their average target price is only 7% before where the shares were traded on March 17th. But this is only an indicator of belief.
Bottom Line in stock COST
Costco provides predictable growth and profits. Over the last five years, capital gains have averaged 26% and dividends have increased by 60%. If you had $ 170 shares five years ago, you raised $ 3.16 in regular dividends last year.
Then there are special dividends, issue when the company’s monetary position becomes large enough to earn them. The last one, delivered in December 2020, was $ 10 per share. Costco holds 443 million outstanding shares. In early February, it had more than $ 11 billion in cash in its books.
Shares of COST experienced a “mini break” in January, falling from $ 565 to less than $ 480. That was your chance. But it is still half a percent lower than in the year and is a purchase for long-term investors.
At the time of publication, Dana Blankenhorn did not have any jobs in the companies mentioned in this story. The opinions expressed in this article are those of the author and are the subject of InvestorPlace.com Guidelines for publication.