Costco stock analysis. COST stock. April 2023<br /><br />Visit our Substack for more: https://www.overlookedalpha.com<br /><br />Legendary investor Charlie Munger has shared that he’s addicted to Costco. His friend, Warren Buffett, had a position in the company until the end of 2020. And it’s been one of the best performing stocks of the last 30 years. <br /><br />Today the company is worth 217 billion dollars so what makes Costco such a good business? <br /><br />For one, it takes care of its stakeholders. <br /><br />Employees are fairly compensated, and even though Costco is the 3rd biggest retailer behind Walmart and Amazon, they provide superior experience through a commitment to affordable prices.<br /><br />A great example is the Costco hot dog. Despite rampant inflation, a Costco hot dog and soda costs the same as it did back in 1985 at just $1.50. <br /><br />Another example is Costco’s rotiserrie chickens which sell for only 4.99. <br /><br />These products are known as loss leaders. They lose Costco money individually, but the low prices get customers in the door and also drive memberships. <br /><br />And Costco owns its own poultry farms in order to keep its prices low.<br /><br />Costco’s financial performance has been remarkably consistent. Their revenue has more than doubled from $113 billion back in 2014 to $234 billion over the last twelve months.<br /><br />Analysts are projecting growth of around 6-7% for the next 3 years, which is still impressive considering the size of the business.<br /><br />As mentioned, memberships have proven to be incredibly good for Costco’s business, not only attracting new customers but also ensuring they continue to shop in their stores. <br /><br />But, due to the nature of the business, their operating margin is fairly low at around 3%. This translates to around $8 billion in operating profit for the last twelve months and 6.1 billion in net income.<br /><br />#stocks #investing #stockmarket #stockstobuy
