4-Star Stocks Poised to Pop: Costco

Based on the aggregated intelligence of 165,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, discount-warehouse retailer Costco Wholesale (Nasdaq: COST  ) earned a respected four-star ranking.

With that in mind, let's take a closer look at Costco's business and see what CAPS investors are saying about the stock right now.

Costco facts

Headquarters (Founded)

Issaquah, Wash. (1976)

Market Cap

$24.7 billion

Industry

Hypermarkets and super centers

Trailing-12-Month Revenue

$76.2 billion

Management

Co-Founder/CEO James Sinegal
CFO Richard Galanti

Return on Equity (Average, Past 3 Years)

12.8%

Cash/Debt

$5.3 billion / $2.2 billion

Dividend Yield

1.5%

Competitors

Wal-Mart Stores (NYSE: WMT  )
Target (NYSE: TGT  )
BJ's Wholesale (NYSE: BJ  )

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 96% of the 3,961 members who have rated Costco believe the stock will outperform the S&P 500 going forward. These bulls include sfmonkeyc and KJHValue.

Just last month, sfmonkeyc wrote that as "the economy continues to slow and decline, Costco's low prices will continue to attract more shoppers." Our CAPS member concludes: "While their total sales may decline as people try to save more, they should still outperform other retailers as they continue to offer better value."

Costco's scale, efficiency, and highly attractive value proposition continue to make it one of our community's favorite retailers. Despite increasing pricing pressure from rival warehouse clubs, Costco's sales per store and square foot remain substantially higher than those of Wal-Mart's Sam's Club, BJ's, and even Target. And while the stock trades a forward P/E premium to those very same foes, CAPS members like KJHValue still think Costco is a tremendous opportunity:

Run extremely well. Management believes that if you keep your eye on running a good business the stock price will take care of itself. This is the kind of long term view that makes a company truly great. I bought in at $45, but at $59 I think this stock is still undervalued. Above all else customers love the low cost quality products, including myself. Room for growth/expansion, low debt, and great management mean a great future.

What do you think about Costco, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!  

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Costco is a Motley Fool Inside Value and Stock Advisor selection. Wal-Mart is also a choice of Inside Value. The Fool owns shares of both Wal-Mart and Costco. The Fool's disclosure policy always gets a perfect score.


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