For a lot of retailers, 2022 has been a challenging year. Rising inflation rates have made it hard for customers to keep spending. In contrast, the stock market has continued to see sharp drops in value due to investor reluctance and anticipation of Federal Reserve action. However, a few stocks have managed to buck the trend, and Costco (NASDAQ:COST) is one such example. COST stock is up 24.8% over the past 12 months. It has made the company one of the rare gems in today’s market. Costco has managed to navigate the broad market problems and keep moving forward with its monthly sales and profits.
Costco has proven time and time again to be a stable institution that has performed impressively well across rising and declining economies. In January 2022, comps were 14% higher than the January 2020 averages. Hence, there are possibilities that a stock split might be around the corner. Therefore, there are two reasons to remain interested in COST stock:
- A potential stock split might occur because of the stock’s rich valuation, leading to renewed retail investor interest.
- Costco has proven to be a stable institution year after year. Regardless of the economic situation, consumers will go to their local store to purchase essentials.
COST Stock: An All-Weather Performer
Costco is a membership-only warehouse club that sells bulk goods at wholesale prices. The company was founded in Seattle, Washington, in 1983 by James Sinegal and Jeffrey H. Brotman. Costco has become the largest membership-only warehouse club globally, with over 111 million members. It has expanded to include retail stores, mail order catalogs, e-commerce websites and an international presence. Customers have stuck with the company and are loyal despite its decline in brick-and-mortar stores. They have proven themselves flexible in a tough economic climate.
In addition, Costco has been paying investors a dividend for more than a decade. As the profits of the company grow, so does their investment share. Along the way, the company has also issued several special dividends. Costco has been consistently increasing profits and cash flow over the past decade thanks to its business model. More than tripling in size, it doesn’t have much of a need to add debt as one of its growth avenues. They are now looking to expand in China.
On the publication date, Faizan Farooque 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.