Low Costs Keep COST Growing- Research Report on Costco Wholesale Corporation

 Low Costs Keep COST Growing- Research Report on Costco Wholesale Corporation

Costco Wholesale's no-frills, low-cost wholesale sales model is generating
healthy sales numbers and stock price growth, and is seen to continue for
years to come

PR Newswire

NEW YORK, January 24, 2013

NEW YORK, January 24, 2013 /PRNewswire/ --

Membership warehouse club Costco Wholesale Corporation (NASDAQ:COST) [Full
Research Report]^(1) posted net sales of $11.21 billion for the month of
December 2012 alone, or $34.42 billion for the first 17 weeks of its fiscal
year. Inflation in gasoline prices and stronger foreign currencies contributed
around 1 percent of the total comparable sales in that same period.

The company was also able to pay out a hefty $7 per share dividend payment
last year - though ahead of schedule - fearing a possible tax increase amid
the fiscal cliff deal. Fortunately, a compromise was reached between Congress
and investors to keep the existing 15 percent dividend rate for most
investors. Those who earn more than $400,000 are now at 20 percent.

A report from Investment Contrarians say Costco is a "wonderful example" of
consistency and steady price appreciation, with the stock price rising from a
respectable $50 in 2010 and upwards of double that in beginning of this year.
We can anticipate that to increase further into the next few years, with
Thomson Financial estimating sales growth of 7.4 percent and 8.5 percent for
the 2013 and 2014 fiscal years.

The company's sales model focuses on selling products at strictly low prices
and in high volume without spending "frivolous" expenses on details such as
advertising, marketing, and store signs. The goods are delivered virtually at
cost to its members, rather Costco's profits are brought in through its
membership fees. A Motley Fool report says those fees are only 2 percent of
the revenue, but 77 percent of its operating income.

The report adds that there was "no appreciable loss of membership" after
Costco raised membership fees by 10 percent in late 2011, meaning it can pass
along the savings to members. Also they don't stock as wide a variety of goods
like Wal-Mart, nevertheless Costco has great buying power despite being a
smaller company.

Costco is still expected to face several challenges ahead. International
expansion is a great opportunity for such businesses, but some have stumbled
in the past. Home Depot was one of such, who was forced to pull back from
expanding to China. Since the retailer could hit hurdles along the way, Costco
would be vulnerable if ever they miss on earnings. In addition, domestic
opportunities are shrinking, therefore making international growth more
important.

Reference Links:

^(1)The Full Research Report on Costco Wholesale Corporation- including full
detailed breakdown, analyst ratings and price targets -is available to
download free of charge at:
[http://www.nationaltradersassociation.org/r/entire_report/49bf_COST]

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Contact: Demi Lapierre
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SOURCE National Traders Association
 
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