Costco Wholesale Corporation
(NASDAQ:COST) is a membership-only warehouse club that provides affordable items and a wide selection of merchandise to its customer base. Current CEO James Sinegal and Chairman of the Board Jeffrey Brotman founded the company in 1976 in San Diego, California, with a focus on low prices and high sales volume. They proceeded to open the first modern day Costco store in Seattle, Washington, in 1983. Since that time, Costco has undergone a remarkable expansion, becoming the first company in history to go from $0 to $3 billion in sales in less than six years. Today, there are 626 Costco warehouses located in countries around the world, making it the second largest retailer in the United States and seventh largest on the planet.
Costco has a current market cap of $49.5 billion and has been trading well recently as the market prepares for the company’s Q3 2013 earnings report, which will be released before the open tomorrow, May 30.
Costco hit a 52-week high of $115.77 on May 28, but it has sold off since then, opening today at $114.53 and dropping to a current price of $113.04 (as of the time this article was written).
Costco has consistently beaten analysts' EPS projections over the last four quarters (4.8% above estimates last quarter), and there is no sign that this will be the quarter to break the streak. With revenues of $97 billion in 2012, Costco has positioned itself as the premier warehouse superstore in America, ahead of competitors like Sam’s Club
(NYSE:WMT) and BJ’s Wholesale Club. Its growth can be attributed to a rise in membership fees and an increase in sales as consumers seeking discounts have flocked to the chain.
In addition, hedge funds have been bullish with Costco recently.
According to Insider Monkey,
hedge funds with long positions in the stock have increased by 3% since Q1 with the largest holder being Warren Buffett’s Berkshire Hathaway
(NYSE:BRK.A), which controls just over $427 million worth of Costco’s stock. Behind Berkshire is Jim Simons’ Renaissance Technologies, which has increased its holdings by over 40% to $170 million. Arrowstreet Capital has also been bullish with over $125 million in Costco shares comprising 1% of its total 13-F portfolio.
All this bullish activity combined with Costco’s history of beating analysts’ projections, and provided that its Q3 earnings report does not disappoint, Costco’s share prices should continue their upward trend on the year, making the company an attractive asset for traders.
No positions in stocks mentioned.