Costco Wholesale Corporation (COST): Baby Boomers Can Make You Money

Wal-Mart Stores, Inc. (NYSE:WMT) is only trading at 15 times earnings. It sports a profit margin of 3.62% (impressive considering the business model), and it yields 2.50%. Wal-Mart’s growth rate isn’t as strong as Costco’s, but growth has been incredibly steady through the years. Another important difference between Costco and Wal-Mart is resiliency. Both companies are resilient, but Costco saw slight declines in revenue and earnings in 2009, whereas Wal-Mart didn’t miss a beat in either area during that difficult time.

Target Corporation (NYSE:TGT) didn’t miss a beat in revenue or earnings in 2009, either. On the other hand, both Target’s and Costco’s stocks dropped approximately 40% during the height of the financial crisis. Wal-Mart’s biggest stock decline during that time was approximately 20%, and it actually appreciated in 2008.

Getting back to Target, it’s currently trading at 17 times earnings, it sports a profit margin of 3.83% (similar to Wal-Mart,) and it yields 2.40%. If you’re going to choose something other than Costco Wholesale Corporation (NASDAQ:COST), Wal-Mart will likely be a better long-term option than Target, but both companies are strong.

Conclusion

Costco Wholesale Corporation (NASDAQ:COST) is a very well-managed company with solid growth potential. If the stock suffers a significant decline, then it can be looked at as an opportunity to add to a position. As baby boomers continue to retire, they will look for bargain-shopping opportunities. Costco fits the bill.

The article Baby Boomers Can Make You Money originally appeared on Fool.com and is written by Dan Moskowitz.

Dan Moskowitz has no position in any stocks mentioned. The Motley Fool recommends Costco Wholesale (NASDAQ:COST). The Motley Fool owns shares of Costco Wholesale. Dan is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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