# Costco COST:US?



## jargey3000 (Jan 25, 2011)

(Is there already a thread - couldn't find it?)
What do you guys think of this one as sort of a 'core' US holding? I've watched it go up & up & never jumped on board... Comments?


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## andrewf (Mar 1, 2010)

I like their business model. They have a lower ceiling in terms of marketshare than mos retailers because they can only really address bigger families/people who don't care about variety. They also can't be a one stop shop. But I think Costco is less threatened by Amazon/e-commerse than most retailers.

No comment in terms of the price you are paying for the business today.


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## jargey3000 (Jan 25, 2011)

....and they charge you to shop there!!!!... Sollie Price was genius!
thanks andrew


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## treva84 (Dec 9, 2014)

Decent business model, excellent management team with a solid growing dividend. The only problem is it's way too expensive - a great company can be a terrible investment if the price paid is too high.

I've been watching Costco for a year waiting to buy in but it's been too expensive. If it was $100 or less I'd be a buyer.


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## atrp2biz (Sep 22, 2010)

andrewf said:


> But I think Costco is less threatened by Amazon/e-commerse than most retailers.


This. 

Also, their supply chain model is excellent. Most items are picked by customers from pallets which minimizes the number of times inventory is handled by employees.

I also like their extra wide parking spots!


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## jargey3000 (Jan 25, 2011)

...as others have said... a great business model!: 
- no-frills warehouse/bunker stores
- off beaten track locations
-limited selction, placed on pallets
- over-size portions or bundles (so you buy too much)
- AND THEY CHARGE YOU TO SHOP THERE!
How'd they manage THAT? 
Side Note: I'm often told the Costco here in St. John's is one of their best stores (volume? profit? average sale?) Our ex-premier Danny-boy Williams is putting together a major real-estate development on the far side of town (actually in back of neighboring Mt. Pearl.) Called "Galway" (locally known as "Danny-Ville") Anyway, story is he's offered Costco free land if they'll close current store & move out there - as a drawing card.


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## hollyhunter (Mar 10, 2016)

The company reported net sales of $13.07 billion for the month of December, the five weeks ended January 1, 2017, an increase of five percent from $12.46 billion during the similar period last year.


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## jargey3000 (Jan 25, 2011)

....I think I'm goin' in......


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## andrewf (Mar 1, 2010)

As a consumer, I'm much cooler on Costco. I am maybe more annoyed than most by their oversized packages that encourage waste. I do like that their quality is fairly high, I just don't need 1.5 L of mustard or 4 heads of lettuce. And you can often get better pricing by being a savvy shopper following promotions.


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## Just a Guy (Mar 27, 2012)

They work on a fairly strict 15% margin on products which pays for their operations (breakeven). Nearly all their profits come from memberships so, as long as memeberships keep increasing, their profits rise.

Of course, they are branching out their income models by producing their own product lines (Kirkland) which has the same 15% margin at retail, but they get wholesale/production profits as well.

They never claim to be the cheapest, in fact some items are more expensive, but they have great quality and excellent policies and service.

It's a quality company. The question is, are they overpriced like most things in the market today?


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## Mechanic (Oct 29, 2013)

At one point I owned a piece of this. Should have kept it, lol. I shop there but have to be careful on pkg quantities. As far as paying for my membership, I get bigger refund checks than I pay for membership so that is ok with me. I wish they would open a few more gas stations and go back to their better fuel prices. Seems their fuel savings aren't as good these days.


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## OnlyMyOpinion (Sep 1, 2013)

Just to tag some recent COST news to this thread: *Costco to open first business centre in Canada — a move that could ‘devastate’ wholesale distributors* December 14, 2016. 
_Costco’s move to open a business centre in Canada... could disrupt the business of traditional office and restaurant supply distributors, experts say...
The first location in Canada, open to all regular Costco members and part of a rapidly expanding business offshoot for Costco in the U.S., will open in Toronto in March...
elements of the new business will compete with Grand and Toy, Staples, and manufacturers and wholesalers in food office and furniture supply such as Unisource Canada Inc., Sysco Canada and Teknion Ltd.
“Costco operates on a 15 per cent margin at retail,” Winder said. “If they work on the same gross margin (for the business centre), which I believe they do, that will significantly disrupt the wholesale market, because wholesalers work on a margin of anywhere from 30 to 50 per cent.”
With annual sales of close to $21 billion and 94 warehouse stores across this country, Costco Canada is embarking on an aggressive expansion in fiscal 2017, opening seven warehouse stores as well as the business centre..._
http://business.financialpost.com/news/retail-marketing/costco-to-open-first-business-centre-in-canada-a-move-that-could-devastate-wholesale-distributors

NB: We own COST long term. It is a large % of our US side holdings. We also shop there regularly. On waste - we find the bulk/reduced packaging to be less wasteful that conventional grocery stores.


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## doctrine (Sep 30, 2011)

30 times P/E and 5.8 times book is a crazy price to pay for 3% revenue growth and 3% net profit growth per year. It's a great company, but very expensive with slow growth and no real ability to generate a lot of cash for dividends or buybacks.


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## jargey3000 (Jan 25, 2011)

...I'm guessing that with all the generally negative feeling in here.... the stock should do quite well over the next 12 months!!! LOL.....


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## OnlyMyOpinion (Sep 1, 2013)

doctrine said:


> 30 times P/E and 5.8 times book is a crazy price to pay for 3% revenue growth and 3% net profit growth per year. It's a great company, but very expensive with slow growth and no real ability to generate a lot of cash for dividends or buybacks.


Valid points for these days. Over the past 4 yrs our dividend has grown from $1.10 to $1.80/sh/yr while share value has gone from $102 to $160. PE was around 25 when we bought. It is sufficient for our USD vacation money.


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## jargey3000 (Jan 25, 2011)

...closed yesterday at $172....yaaaawn......


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## zylon (Oct 27, 2010)

Saturday is half over and I can't find a stinky bear anywhere.


> VIX : It is constructed using the implied volatilities of a wide range of S&P 500 index options. This volatility is meant to be forward looking, is calculated from both calls and puts, and is a widely used measure of market risk, often referred to as the "investor fear gauge."
> www.investopedia.com/terms/v/vix.asp





Some excellent OldPhart thinking here:
http://www.financialsense.com/art-hill-technicals-ken-fisher-2017-market-outlook

Click on *MP3*
Ken Fisher segment starts at 44 minutes.


> In the second half, we speak to Ken Fisher of Fisher Investments on his 2017 macro outlook and why he thinks 2017 will be a better year for the stock market than last year.


free screen capture software


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## jargey3000 (Jan 25, 2011)

*Some excellent OldPhart thinking here:
http://www.financialsense.com/art-hi...market-outlook*
hav ya gotta sign up to get this zylon?


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## zylon (Oct 27, 2010)

^^ nope nope ^^
It's free!


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## jargey3000 (Jan 25, 2011)

your link brings me to like the FS homepage? where do i go from there?
i dont see *MP3* ?


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## jargey3000 (Jan 25, 2011)

(pssst...zylon....look at your no. of posts.....and mine.... )


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## zylon (Oct 27, 2010)

jargey3000 said:


> your link brings me to like the FS homepage? where do i go from there?
> i dont see *MP3* ?


click on "podcast"
and then "Art Hill & Ken Fisher"
then MP3


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## zylon (Oct 27, 2010)

jargey3000 said:


> (pssst...zylon....look at your no. of posts.....and mine.... )


I'd better get with the program, eh?
- and i was here a couple months earlier too.


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## jargey3000 (Jan 25, 2011)

zylon said:


> I'd better get with the program, eh?
> - and i was here a couple months earlier too.


wellll......I didn't want to rub it in......


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## james4beach (Nov 15, 2012)

Surprised there haven't been any posts on this in a while, considering how well COST has performed.

Here's a 5 year chart of Costco (in green) versus the S&P 500. It has consistently performed better than the market average, and even better than the consumer staples sector, in the last few years.


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## m3s (Apr 3, 2010)

I remember noticing a decade ago how Costco always had the busiest parking lot/store. Sears was a ghost town and the mall was in decline. This has only continued over time

My local Costco is a traffic jam you can barely find parking. Also we got a new Costco in Fairbanks when I was there and the membership/warranty transfers over between US/Canada seamlessly (whereas vehicle brands often have separate companies and don't/can't help you)

Costco has said on their recent conferences they will need to increase membership costs. They are committed to maintain low margins on their prices. This is a good model that sets them apart


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## Money172375 (Jun 29, 2018)

Having been down in Florida for 2 weeks, it seems only Amazon, Walmart and Costco get any consumer traffic.


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## m3s (Apr 3, 2010)

Money172375 said:


> Having been down in Florida for 2 weeks, it seems only Amazon, Walmart and Costco get any consumer traffic.


You can use a Canadian Costco membership in the US

US amazon prime doesn't work in Canada though. The apps are different and you have to change region

Not sure if you could return a Walmart item across the border


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