4. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Holders: 69
Costco Wholesale Corporation (NASDAQ:COST) operates membership warehouses offering branded and private-label general merchandise products in the United States, Puerto Rico, Canada, the United Kingdom, Mexico, Japan, Korea, Australia, Spain, France, Iceland, China, and Taiwan. Costco Wholesale Corporation (NASDAQ:COST) is one of the top stagflation stocks to invest in.
On November 28, Bank of America said Costco Wholesale Corporation (NASDAQ:COST) had strong customer traffic on Black Friday. BofA analyst Robert Ohmes sees warehouse clubs as well positioned compared to peers this holiday season on the back of their robust value proposition and membership strength. For Costco Wholesale Corporation (NASDAQ:COST), BofA believes a premium valuation is warranted given the solid customer traffic growth and strong membership renewal rates. Even with a murky economic outlook for 2023, membership rates will potentially remain resilient for Costco Wholesale Corporation (NASDAQ:COST), the analyst told investors.
Deutsche Bank analyst Krisztina Katai on November 29 reiterated a Buy recommendation on Costco Wholesale Corporation (NASDAQ:COST) but trimmed the price target on the shares to $578 from $581. The analyst told investors to stick with the “winners” in retail.
According to Insider Monkey’s third quarter data, Costco Wholesale Corporation (NASDAQ:COST) was part of 69 hedge fund portfolios, compared to 64 in the prior quarter. Ray Dalio’s Bridgewater Associates is the largest stakeholder of the company, with 1.2 million shares valued at $566.5 million.
Here is what Cooper Investors Global Equities Fund has to say about Costco Wholesale Corporation (NASDAQ:COST) in its Q3 2022 investor letter:
“The US economy continues to run hot – the labor market is extremely tight and a number of executives we spoke to described their challenges in retaining staff and preventing competitors from poaching talent. Industrial companies in particular continue to see record backlogs, with the easing of logistics and supply chain constraints only just starting to have an impact on deliveries and lead times.
In terms of inflationary pressures, the vast majority of our holdings have been able to leverage strong market positions and stakeholder relationships to push pricing through in 2022 such that minimal impact to earnings has occurred. Clearly this is not a lever than can be pulled indefinitely but the more experienced management teams have kept some of their powder dry. Our meeting with management at Costco in Seattle was memorable for several reasons but one was their latent ability to increase member pricing which they have not done in over 5 years (and thus likely to do in 2023)…
…To conclude we’ll return to our meeting with Costco mentioned earlier. The business quality is no secret after decades of incredible execution, but the meeting gave us renewed conviction around Value Latencies in terms of the runway for growth, the focus on enhancing customer value, Costco’s vast buying power (it purchases 30% of the world’s jumbo cashews as one example) and management’s feral focus on the business model and cost discipline.”
