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- 📈 $COST: 17% Profit Jump w/ Room to Grow
📈 $COST: 17% Profit Jump w/ Room to Grow
Costco hits record $254B revenue as global expansion & 90% member loyalty fuel 17% profit growth.
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COST: COST $890.96
This week, we're putting the spotlight on Costco. Being one of the largest warehouse club operators in the United States, they've built something special that's got investors taking notice.
Let's dive into what makes this retail giant tick! 🚀
Strong Members, Strong Business
Costco's built their success on a remarkably simple but powerful strategy – they sell high volumes of foods and general merchandise (including household products and appliances) at discounted prices through membership warehouses. Their wholesale clubs have developed an incredibly loyal following, with membership renewal rates exceeding 90% globally. This impressive loyalty comes from a straightforward approach: selling high-quality goods at little more than cost plus overhead. The key strengths driving their success are clear: strategic investments, a customer-centric approach, merchandise initiatives, and an emphasis on membership growth. These factors have been helping them register decent sales and earnings numbers. Additional Reading |  |
International Growth Champion
Here's something fascinating about Costco – while other successful retailers have struggled with cultural differences in overseas markets, Costco's value proposition is working beautifully across borders. They're based in Issaquah, Washington, but their reach extends far beyond, operating e-commerce sites in the United States, Canada, the United Kingdom, Mexico, Korea, Taiwan, Japan, and Australia. Their low-priced merchandise model resonates just as well in France or China as it does in the U.S., which dramatically expands their growth potential. This success in foreign markets has set them apart from competitors who've faced challenges abroad. Additional Reading |  |
Solid Financial Performance
Looking at the numbers, Costco's recent performance tells a compelling story. In fiscal 2024 (ended Sept. 1), they reported revenue of $254 billion, marking a 5% increase from year-ago levels. Even more impressive was their net income, which grew 17% to nearly $7.4 billion as expenses grew more slowly than revenue. The stock currently trades at a price-to-earnings ratio of 54, which speaks to the high demand for quality companies like Costco. The market's enthusiasm reflects their consistent delivery of value and rock-solid business fundamentals. Investors are particularly impressed by their favorable product mix, steady store traffic, pricing power, and strong liquidity position – all factors that should help Costco keep performing well. Additional Reading |  |
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Major Market News
Source: DALL-E
Wednesday, October 30th - GDP Report
What: Q3 Gross Domestic Product data shows the annualized growth rate of the U.S. economy
Impact: A 3.1% actual reading vs 3.0% forecast suggests slightly stronger economic growth than expected, important for assessing recession risks and Fed policy direction
Source: Bureau of Economic Analysis
Thursday, October 31st - PCE Index
What: Personal Consumption Expenditures index measures price changes in consumer goods and services
Impact: Core PCE at 2.6% year-over-year vs 2.7% forecast suggests slightly moderating inflation, crucial for Fed policy decisions
Source: Bureau of Economic Analysis
Friday, November 1st - Employment Report
What: Comprehensive monthly report on U.S. employment situation, including non-farm payrolls, unemployment rate, and wage growth
Impact: Notable divergence with 110,000 jobs vs 254,000 forecast suggests significant slowdown in job creation, while steady 4.1% unemployment rate and 4.0% wage growth indicate labor market stability
Source: Bureau of Labor Statistics
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A note that Underwriter and this newsletter is not investing or trading advice. These are stocks and information we find interesting. Please consult with a financial professional. By reading, you agree to not take this as financial advice and assume all risk. Futures, stocks, bonds trading of any kind involves a lot of risk. No guarantee of profit is made. In fact, you may lose your entire investment. We guarantee no profit whatsoever, You assume the entire cost and risk of any trading or investing activities you choose to undertake. You are solely responsible for making your own investment decisions. Owners/authors of this newsletter, its representatives, its principals, its moderators and its members, are NOT registered as securities broker-dealers or investment advisors either with the U.S. Securities and Exchange Commission, CFTC or with any other securities/regulatory authority. Consult with a registered investment advisor, broker-dealer, and/or financial advisor. Reading and using this newsletter or any of my publications, you are agreeing to these terms. Any screenshots used here are the courtesy of Underwriter. The data, quotes and information used in this blog is from publicly available sources and could be outdated or outright wrong - I do not guarantee accuracy of this information.