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RoboStreet – April 11, 2019
America’s Heavyweight Big Box Retailer
When asked about who dominates the retail sector, most investors will say either Amazon.com (AMZN) or Walmart Inc. (WMT) – arguably the two 800-pound gorillas by sheer size. Amazon.com is the de-facto online e-commerce giant and no one occupies more retail brick and mortar floor space than Walmart. Both companies have served up huge returns for shareholders over the last decade and should be commended for doing so. Walmart has served up a 105% return for the past ten years and Amazon.com has seen is stock value soar by 20-fold over the same decade -an incredible feat.
And then there is what I call the prize fighter in the ring of big-box retail where $10,000 invested back in 2009 would be worth over $50,000 today or 400% more than that of Walmart’s return. I’m talking about Costco Wholesale (COST) which Vice Chairman of Berkshire Hathaway, Charlie Munger, calls the best-managed company in America and “one of the most admirable capitalistic institutions in the world.”
Source: www.clark.com
The membership warehouse retail giant is a very special company to those that shop there; Costco brings high-quality merchandise to its well laid out stores at prices that are a sliver above the company’s cost. Its membership model has created what might be the most loyal customer base of any retailer in the business. The company generated over $147 billion in revenues for 2018, and net income of $3.13 billion. Only 4% of total sales come from e-commerce – so the future for online sales is just huge.
And remember we’re not talking about day-trading here. I’m looking for 50-100% gains inside of the next 3 months, so my weekly updates are timely enough for you to act.
Of that $3.3 billion in profit, roughly $2.6 billion will come from membership fees alone, which is almost 100% pure profit to the company. The company enjoys a fantastic 88% annual renewal rate from its members. Costco employs over 245,000 people, operates 762 stores of which 527 or in the U.S. 100 in Canada, 39 in Mexico and 28 in the UK, with 26 in Japan, 15 in South Korea, 13 in Taiwan, 10 in Australia, 2 in Spain, 1 in Iceland and 1 in France – with the average store size around 145,000 square feet.
Costco shoppers have also gravitated heavily to the company’s pharmacy, where prices for drugs of all tiers are typically less than those of the major drugstore or grocery chains and even compete well on price with mail order pharmacy benefits companies. In addition, Costco offers gasoline at prices that are $0.06 to $0.10 below local gas stations in every market they operate in. So, between food, gas, and meds, Costco is a go-to destination for three of the top household expenses for most consumers.
This week, Costco reported sales data for March where net sales rose 7.4% to $13.87 billion from a year-ago period, which saw same-store sales rise 5.7%. The stock continues to impress Wall Street with such strong numbers, its shares trading to a new all-time high of $247.09 last Friday. And there is likely more upside to go based upon my AI-driven Seasonal Chart showing four “higher” probability readings this week.
For investors seeking the highest of quality retailers that touch the lives of nearly one-third of all American households where the opportunity in growth for e-commerce is tremendous, then Costco should be considered for purchase where 70% of GDP in the U.S. is attributable to consumer spending. Will the next decade for Costco deliver another 500%+ return to investors? That’s hard to say, but based on current fundamentals and technical data from my Tradespoon tools – that stock is poised to trade higher for weeks and months to come.
As to those reading this column that are not yet charter members of my stock advisory RoboInvestor, I invite you to examine our performance for the trailing 12 months when we launched the service in April 2018. While the S&P 500 has returned +9.50% over the trailing 12-month period. The RoboInvestor Portfolio has delivered a stunning 28.37% return or 3x that of the stock market’s benchmark index.
Even more notable is that the RoboInvestor returns weren’t manufactured by one, two or three “home run” stocks that made the numbers light up. What I want to highlight most of all is the Winning Trades Percentage of 92.31%. RoboInvestor subscribers are making money on better than 9 out of every 10 trades recommended. That is the power of artificial intelligence hard at work. We made money on 48 trades and lost money on only 4. I thought it best to put up our one-year scorecard because while dozens of stock advisors promise fat returns, my RoboInvestor track record speaks for itself.
During the past year, investors have had to contend with a hawkish Federal Reserve, a trade war with China, potential systemic credit risk in Europe, the Mueller investigation, Brexit and fears of a global slowdown. And yet, RoboIvestors just crushed the S&P’s performance year-over-year. Simply speaking, the entire first-year cost of signing up can be paid for in one trade.
The only question anyone reading this report card should have to ask is which form of payment they want to use to sign up as a new RoboInvestor Charter Member. My special offer today is to try a 1-year subscription for only $97, or 50% off the regular $194 annual subscription rate. Take the guesswork out investing and come to call RoboInvestor your own system that produces winners over 92% of the time and beats the market by three-fold. Take me up on my offer today and profit with me tomorrow and for the next year ahead. Make that trade and get long RoboInvestor!
And remember we’re not talking about day-trading here. I’m looking for 50-100% gains inside of the next 3 months, so my weekly updates are timely enough for you to act.
*Please note: RoboStreet is part of your free subscription service. It is not included in any paid Tradespoon subscription service. Vlad Karpel only trades his own personal money in paid subscription services. If you are a paid subscriber, please review your Premium Member Picks, ActiveTrader, MonthlyTrader, or RoboInvestor recommendations. If you are interested in receiving Vlad’s personal picks, please click here.
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