When researching retailers for investment, you may find that they operate in a highly competitive environment and finding the ones that stand out may prove challenging. However, online conglomerate retailer Amazon.com (NASDAQ:AMZN), apparel chain The Buckle (NYSE:BKE), and membership warehouse company Costco (NASDAQ:COST) set themselves apart for many reasons. Here are just a few.
Amazon: The online portal
It's hard to believe that nearly two decades ago Amazon started out as a mere online bookseller. Now the company wants to become the one-stop online portal for all of your wants and needs. It now sells electronics, housewares, comic books, groceries, original streaming video content, and even artwork. Amazon also serves its other stakeholders, such as content providers, by allowing them to self-publish their work. The retailer understands that the customers pay its bills, and goes to great lengths to satisfy them. Its year-to-date capital expenditures expanded $806 million versus the same time last year due to investments in new technology, fulfillment centers, and corporate offices. Amazon maintains the financial flexibility to invest in expansion and innovation. Its cash and investment balance of $7.7 billion equates to 85% of stockholders' equity, with long-term debt to equity amounting to only 34%.
Buckle operates in the highly competitive apparel retail space where many struggle for their survival. However, Buckle shareholders can rest easy knowing that it's under the stewardship of manager/owners who share your best interests. Chairman of the Board Daniel J. Hirschfeld and President and CEO Dennis Nelson own approximately 34% and 6%, respectively, of the company's stock. Their leadership ability resulted in a balance sheet with no long-term debt, and cash and investments equating to 42% of stockholders' equity as of the most recent quarter. Also, Buckle likes to reward its shareholders with generous dividends instead of more intangible share repurchases. On Dec. 10, Buckle announced a $1.20-per-share special dividend and a 10% increase in the company's regular payout payable on Jan. 27, reflecting management's faith in the company's well-being.
Costco has earned the reputation of employee-friendliness in the financial media. Employee rating site Glassdoor.com gives Costco a rank of 3.8 out of 5. The average employee at Costco makes an incredible $20.89 per hour according to an article in Fortune magazine. Good employee treatment and pay result in taking care of the No. 1 person in retailing: the customer. The Fortune article cites Consumer Reports in saying that Costco ranks "among the top five retailers nationwide in customer satisfaction." Companies that take good care of stakeholders will ultimately win. Costco possesses an excellent balance sheet. Its cash/investment balance comprises 56% of its stockholders' equity while its long-term debt-to-equity remains at a reasonable 44%.
Amazon had a negative free cash flow of $2.7 billion as of the end of September . Investors should expect this to continue as the company continues to invest in the customer experience by building infrastructure and administrative support, and enhancing technology. Investors need to eye Buckle's 33% decline in year-to-date free cash flow brought on by a buildup in its inventory. However, on a positive note, Buckle saw an increase of 8% in its year-to-date online sales according to its last quarterly earnings announcement. Costco also struggled a bit, with its free cash flow declining 41%. However, it remains worthy of attention unless you see a shift in its employee-friendly culture. All three of these companies deserve a place on your Motley Fool Watchlist and merit more of your research time.
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Fool contributor William Bias owns shares of The Buckle. The Motley Fool recommends and owns shares of Amazon.com, Costco Wholesale, and The Buckle. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.