In the video below, Fool analysts Isaac Pino and Austin Smith take a look at the bull case for Costco Wholesale (COST 0.17%).
Costco offers a terrific value opportunity for customers, and that translates into success. It does not spend on "frivolous" expenditures that other retailers do, such as advertising, marketing, store signs.
That no-frills model allows Costco to deliver goods almost at cost to its members, then make money from membership fees. Those fees make up only 2% of its revenue, but 77% of its operating income, Isaac says.
Costco also has a great combination of pricing power and buying power. In Nov. 2011, Costco raised membership fees by 10%. A year later, there was no appreciable loss of membership, Issac says. That means it can pass along the costs of goods to members.
And while it may be a smaller company than Walmart (WMT 1.32%), Costco has great buying power because it does not stock as wide a variety of goods.
Costco also has great intangibles -- fantastic service and well-trained management, often groomed from within the company.
The relevant video segment can be found between 2:52 and 6:28.
