Costco: Buy It Again Before Everyone Else Catches On
View original at finance.yahoo.comCostco: Buy It Again Before Everyone Else Catches On This article first appeared on GuruFocus. Costco (COST) is one of my favorite stocks to generally own, sometimes trade…
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Author assumes Costco's retail business at 2% operating margin is worth nothing to shareholders in valuation model
80% confidenceCostco has upside potential of 22% to $500 billion market cap, or even more in best-case scenario
80% confidenceThe best opportunity to buy Costco and earn strong double-digit returns is well behind us now
80% confidenceCostco's membership fees have historically grown at a pace surpassing 5% in most recent fiscal year
80% confidenceMembership fee increases of around 10% occur every six or seven years
80% confidenceCostco has potential to operate 520 stores in UK, Germany, Australia and Japan versus current 80
80% confidenceCostco has a membership renewal rate of more than 92%
80% confidenceFed's dot plot suggests three more rate cuts of 25 bps through end of next year
80% confidenceThe trip to $500 billion market cap could play out over 12 to 24 months
80% confidenceA 10-bp reduction in risk-free rate would add roughly 10% to upside opportunity
80% confidenceCostco remains misunderstood by too many potential investors despite efficient market premise
80% confidenceMembership revenues carry very little direct costs and flow almost cleanly to pretax income
80% confidenceBest-case scenario suggests opportunity for membership increase of 50% in four developed countries alone
80% confidenceCostco stock could prove countercyclical if market hits a pothole
80% confidence