The Costco (NASDAQ:COST) conundrum continues.
Arguably, the company has one of the strongest business models in retailing. Customers pay yearly membership dues just to get into the warehouses. But once they're in, they're in. That's because the company is designed to create value and share it with consumers in the form of lower and lower prices. And with membership renewal rates getting close to 90%, things must be working pretty well.
Some have questioned whether Costco's policy of capping gross margins on products is in fact better for customers than for shareholders. After all, competitors like BJ's (NYSE:BJ), Wal-Mart (NYSE:WMT), Kroger (NYSE:KR), and Rite Aid (NYSE:RAD) don't use that policy.
Costco is certainly built to last, and it does have a competitive advantage in the industry. Unfortunately, that brings us to yet another conundrum. Just because Costco is a great company, does that mean it's a great investment?
That's what Tim "The Bull" Otte and Rich "The Bear" Smith want to determine, and they'll give you their arguments in the links below.
Duel on, Fools!
- Read the bull argument
- Read the bear argument
- Read the bullish rebuttal
- Read the bearish rebuttal
- Sound off in Motley Fool CAPS
- Vote for the winner
Costco is a Motley Fool Stock Advisor selection, and Wal-Mart is a Motley Fool Inside Value recommendation. Once you've finished voting for the winner, why not sign up for a free 30-day trial to either newsletter to find out how they both outperform the market?
Retail editor and Inside Value team member David Meier is ranked No. 1,303 out of 29,883 in CAPS, and he does not own shares in any of the companies mentioned. You can view his TMF profile here. The Fool takes its disclosure policy very seriously.
