In a duel rebuttal, I'm given 300 words with which to counter the most damaging points made by my opponent. But the thing is, there's very little in what Tim wrote that I object to -- in fact, there's very little that isn't widely known by investors already.

Yes, Costco (NASDAQ:COST) is a better operation than either BJ's (NYSE:BJ) or Sam's Club. Yes, it's growing at a rapid pace. And yes, its stock costs too darn much.

A marginal investment
Lacking a reason to argue, I'd like to use my allotted space to add a little context to this discussion. Specifically, I want to incorporate a table that my colleague Rich Duprey put together as part of his Foolish Forecast previewing Costco's earnings report last month:

Margin

02/06

05/06

09/06

11/06

02/07

05/07

Gross

12.4%

12.4%

12.3%

12.3%

12.3%

12.2%

Operating

3%

3%

2.9%

2.9%

2.8%

2.7%

Net

1.9%

1.9%

1.8%

1.8%

1.7%

1.7%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

Those of you who caught Rich's pre-earnings column will see that I added a final column to reflect the post-earnings Q3 results. Notice that the trend Rich highlighted over the previous 12 months continued in the May quarter -- gross and operating margins continue to slide, while the net sits at 1.7%, down 20 basis points versus this time last year. (While that may not sound like much, a 20-b.p. decline shaves 11% off Costco's razor-thin margins.)

So it's not just that Costco is earning lower margins than Wal-Mart (NYSE:WMT), Target (NYSE:TGT), or Best Buy (NYSE:BBY). The profitability gap between Costco and its peers is yawning wider, ever wider -- and Costco sits on the wrong side of the gap.

You're not done yet! If you missed any of the arguments, they're here. If you've already read everything, cast your vote for the winner here.

Costco and Best Buy are Motley Fool Stock Advisor selections. Wal-Mart is a Motley Fool Inside Value recommendation.

Fool contributor Rich Smith does not own shares of, nor is he short, any company named above. If he did (or was), The Motley Fool would require him to tell you so. We're sticklers about things like that.