Wal-Mart Stores, Inc. (WMT), Safeway Inc. (SWY), And 3 Nice Retail Stocks To Keep An Eye On

Costco Wholesale Corporation (NASDAQ:COST) is growing every year

Finally there’s Costco, a very interesting investment opportunity, in our view. Despite its high stock price of $104.21 (historical max was $106.13), the company offers a remarkable Piotroisky F-Score of 7, reflecting a healthy financial situation and plenty of chances to outperform the market, while trading at one of the lowest P/E rates (23.3 times) in the last couple of years. Revenue per share and operating margin are also to be watched closely, as they have been receiving constant expansion for a long time now. Even through tough macroeconomic situations, where most retailers have experienced comp declines, Costco Wholesale Corporation (NASDAQ:COST) has succeed to ameliorate comps, delivering a 4% comparable store sales growth in March 2013 (YoY).

Although debt is high and long-term obligations for $2.5 billion have been assumed over the past three years, Costco Wholesale Corporation (NASDAQ:COST)’s interest coverage is comfortable, moreso than 88% of the 49 companies in the discount store sector, meaning that the firm’s cash is sufficient to cover all of its liabilities. Use of free cash flow has also been wise over time, mainly destined to repurchase stock and pay out dividends. Expansion strategy is also interesting, as the firm is not only focused on domestic expansion, but also on global growth.

The aforementioned factors leverage in Zack’s expected short term returns, projected in the 18% strip, annually. Our recommendation: buy.

Conclusions

With numerous advantages mentioned above, Costco Wholesale Corporation (NASDAQ:COST) stands not only as our pick, but also as many others’. Zack’s and Morningstar analysts, for instance, are recommending to buy Costco stock, while George Soros, Pioneer Investments, and Jim Simons bought over two million shares during 4Q12. Sometimes, bandwagoning is not such a bad idea.

The article 3 Great Retail Stocks To Keep An Eye On originally appeared on Fool.com.

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