5 Most Undervalued Retail Stocks to Buy According to Hedge Funds

2. Costco Wholesale Corporation (NASDAQ:COST)

Number of Hedge Fund Holders: 69
P/E Ratio as of January 23: 37.23x

Return since January 23: 9.7%

Costco Wholesale Corporation (NASDAQ:COST) started its operations in 1983, in Seattle, Washington. The company is engaged in the operation of membership warehouses in the US and Puerto Rico, Canada, UK, etc. It also operates e-commerce websites in the US and other countries.

The company’s net sales for Q1 2023 saw a growth of 8.1% to $53.44 billion from $49.42 billion in the last year. Its net income for the quarter came in at $1,364 million ($3.07 per diluted share) against $1,324 million ($2.98 per diluted share) in the previous year.

Costco Wholesale Corporation (NASDAQ:COST) saw net sales of $23.80 billion for the retail month of December, the five weeks ended January 1. This exhibits 7.0% growth from $22.24 billion in the previous year. For the 18 weeks ended January 1, its net sales were $82.16 billion, exhibiting 7.6% growth from $76.34 billion in the prior year.

Analysts at BMO Capital Markets initiated their coverage on the shares of Costco Wholesale Corporation (NASDAQ:COST) and they reduced their price target from $600.00 to $555.00 on December 9.

Hedge fund sentiment is strong for Costco Wholesale Corporation (NASDAQ:COST). The company has 69 hedge funds with stakes in it as of the end of the third quarter, compared to 64 funds in the previous quarter.

Madison Funds, managed by Madison Investment Management, published its investor letter for Q4 2022 and mentioned Costco Wholesale Corporation (NASDAQ:COST). Here is what the fund said:

“Costco Wholesale Corporation (NASDAQ:COST) stock fell after November sales results showed a slowing consumer. The slower November sales were followed by a slight first quarter miss with lower-than-expected margins. Costco commented that they are not seeing trade-down but private label penetration has increased modestly. Traffic continues to be positive, and Costco remains well-positioned in a more challenging macro environment due to its strong value proposition.”