Every time I turn around, I feel like I discover another supersized club store to rival the juggernaut Costco (NASDAQ:COST). Then I come across this interesting play called PriceSmart (NASDAQ:

PSMT).

Then I discover that I’ve written a really dumb headline, because at one point the two companies had actually merged, and then Costco spun off PriceSmart.

All that makes me wonder whether PriceSmart is the next-Costco-that-already-was-once-Costco.

For starters, PriceSmart is much smaller. It’s got 29 stores spread across 12 countries (primarily Central America and the Caribbean) and works just like Costco does. In fact, it arguably is a better operation that Costco, as it still would turn a profit if its $29 membership fees vanished, whereas Costco actually would be running a $300 million annual loss without them.

Indeed, that difference is due to gross merchandise margin. Costco’s hovers around 11%, whereas PriceSmart’s is closer to 15%.

The model has worked extremely well, with revenues doubling and net income quadrupling since 2007. Sales are expected to jump 17% this year, driven by an incredibly enviable same-store sales increase of 17% as well. Already this year, PSMT’s sales for the most recent quarter were up 22%, with net income up 13%.

PriceSmart is on very solid footing financially, just like its North American compatriot. It has $92 million in cash and its offset by only $76 million in debt. With free cash flow of over $30 million each of the past two years, there is room for the company to take on some more debt to expand more rapidly.

Another attractive feature is that the founder holds almost a third of the company’s shares, so he’s got a lot of skin in the game.

Of course, as with nearly every darn stock I’ve been writing about recently, PriceSmart is wildly overpriced. Even giving it a very generous 20x multiple, fair value is about $48. The stock trades at $75. Costco is trading at roughly the same premium.

So, my advice is to just sit tight and wait for a big market pullback to jump in.

Though there is one difference between what you can expect when buying into these companies: PriceSmart is one-tenth the size of Costco, so your chances of a multibagger are much better than with its parent.

As of this writing, Lawrence Meyers did not hold a position in any of the aforementioned securities. He is president of PDL Capital, Inc., which brokers secure high-yield investments to the general public and private equity. You can read his stock market commentary at SeekingAlpha.com. He also has written two books and blogs about public policy, journalistic integrity, popular culture and world affairs.