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Quarterly sales jumped 14% to $11.33 billion, and February comparable store sales and second quarter same-store sales both increased an impressive 11%. Despite these results, though, investors were bidding the stock down on high volume, based on a couple of concerns.
First, the market is focused on the near-term question of whether Californians who shopped at Costco during the labor disputes would return to grocery stores like Safeway
There are also ongoing concerns about Costco's operating expenses. It pays higher salaries and better benefits to its workers than Wal-Mart
But for investors with a long-term time horizon, Costco continues to deliver impressive results. The top line is still growing steadily, and the management is addressing the issue of worker's compensation in California. It refuses to waver on its policy of paying higher wages and benefits than the competition, seeing it as an investment that leads to significantly better employee satisfaction and loyalty over the long-term, which in turn will create a sustainable competitive advantage that's difficult to replicate.
Tom Gardner recommended Costco in the Motley Fool Stock Advisor newsletter back in May 2002. At the time the stock was trading around $40, and Tom said he hoped that "the current market volatility will give us a slightly better entry price" for long-term investors. His comments ring true today -- a dip in the stock price based on short-term concerns may provide a great buying opportunity for patient investors.
Since the April 2002 inaugural issue, David Gardner's recommendations have returned an average of 71.6%, and Tom's picks are up 42.47%. Both brothers are significantly outperforming the S&P 500's 18.41% over the same period. Check out Motley Fool Stock Advisor , risk-free, for 6 months.
Fool Contributor Salim Haji owns shares of Costco, but none of the other companies mentioned, and actually enjoys shopping at the Costco near his home in Denver, Colo.