Costco (COST) Should Continue to Climb

Costco (COST) is a stock that I have regrettably overlooked in the past. I thought big box retailers were out of favor. Wal Mart is gasping for air every time it reports same store sales numbers. BJ's Wholesale (BJ) is in a restructuring phase. So why would anyone want to own Costco?

I finally stepped foot into a Costco store this week. I was impressed with how friendly the staff was and how well the store was laid out. Below are some brief observations.

• All merchandise is sold in bulk. Customers spend a significant amount of money each time they visit the store. Costco has high inventory turnover. Therefore, Costco is able to collect revenue from the sale of inventory before they have to pay suppliers.
  
• Only American Express, cash, or checks are accepted as tender. Costco has bypassed the high credit card fees charged by Visa and Mastercard (MA).
• Merchandise is placed into your cart once it has been scanned at checkout. No plastic bags are wasted. Two stores in CA are solar powered.
• Costco has industry low employee theft due to the large nature of products sold.
• Costco owns the building and land of 359 out of its 458 warehouse properties.

All of the above information would make me want to buy the stock. Plus Costco trades near the same EV/EBITDA values as Target (TGT) and Wal Mart (WMT).

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