Inflation’s Got Nothing on Costco. Why COST Stock Is a Buy.

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COST stock - Inflation’s Got Nothing on Costco. Why COST Stock Is a Buy.

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Despite the increase in inflation number to a 40-year high of 7.9% in February, Costco Wholesale Corporation (NASDAQ:COST) recorded $21.61 billion in net sales in the five weeks ended April 3, 2022. This represents an increase of 18.7% when compared to $18.21 billion filed in the same period last year.

Looking into the more accurate 31-weeks’ sales trend, the membership-only big-box retail giant reported a 16.7% increase in net sales from $111.37 billion filed in the same period last year to $130 billion in the period under review.

In its March sales report, comparable sales rose by 17.2% across the company’s 829 warehouses and 19.1% in the U.S. where it operates 573 warehouses. Comparable sales in e-commerce units grew by 8.9%.

But excluding changes in gasoline prices and foreign exchange from the numbers, comparable sales appreciated by 12.7% in the U.S. and 12.2% across the company’s warehouses. E-commerce appreciated by 9.2%. This shows that regardless of the global uncertainty, the company remained viable.

Over the years, Costco’s membership-only model has helped ensured consistent patronage across its units, and during Covid-19 its e-commerce sales jumped … and have continued to rise since then.

“Our overall online business will continue to grow. Will we get tricky? No, we won’t,” CEO Craig Jelinek said on Closing Bell. “We’ll just continue to bring value on high-end goods and quality merchandise, and deliver either through the warehouses, brick-and-mortar, or through e-commerce.”

In the last 12 months, Cost stock has risen by $249.40 or

Costco’s revenue might drop in certain units going forward due to the high inflation and other external factors. However, high gasoline prices will compensate for that deficit. For me, COST stock is a buy, but I doubt we will see its extra-ordinary past run given the current situation.

On the date of publication, Samed Olukoya did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


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