What happened
Not for the first time this year, Costco Wholesale (COST +1.58%) did better than the broader stock market on Tuesday. Shares of the big retailer eked out a 0.4% gain on a day when many other titles tanked notably, and the S&P 500 index was dragged down by 1.5%. An analyst's recommendation upgrade was a major factor in helping Costco stock defy gravity.
So what
The upgrading party was Northcoast Research's Chuck Cerankosky. Before market open on Tuesday, he changed his recommendation for the better; Costco is now a buy, according to him, where previously it was merely a hold.
In a fresh research note on the popular retailer, Cerankosky said that its second-quarter results not only topped expectations, it positioned the company for a solid second half of its current fiscal year despite macroeconomic concerns that haven't entirely faded from investor consciousness.
The analyst wrote the following:
Costco has been here before. At these times, its strong value proposition in consumables -- from food to pharmacy and HBC to household supplies to gasoline -- not only allows it to retain its many loyal members but attract new ones.
NASDAQ: COST
Key Data Points
Now what
Cerankosky also wrote glowingly of Costco's "impeccable" balance sheet, which gives the company the financial muscle to pay an anticipated special dividend, plus a potentially quite large share-repurchase program. The prognosticator sees both occurring in the next one to two years; he speculated that a potential special dividend could amount to $10 per share at a minimum.
