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In today's Motley Fool Take:

Bulking Up at Costco

By Alyce Lomax (TMF Lomax)

Costco Wholesale (Nasdaq: COST) was one of many retailers that reported a healthy increase in same-store sales in May today. Despite last year's concerns about its unusually generous employee benefits, as well as costs associated with workers' comp issues, Costco seems to be redeeming itself.

In May, Costco's same-store sales grew 16%, with overall sales increasing 19% to $3.80 billion. The uptick in sales was associated to customers' robust demand for electronics and food.

Several months ago, rival Wal-Mart(NYSE: WMT) cited the high price of gas as a reason its customers might get tight with the old wallets. However, Costco might be well insulated against such an environment. First of all, many Costco warehouses offer discount gas for their members. (Of course, some Wal-Marts do the same thing.) That's a good lure, especially if people begin to consolidate their errands into as few stops as possible.

At the same time, it's hard to ignore the complaints of people who are noticing the high cost of food at their local grocery stores -- with receipts likely bolstered even further by rising dairy costs. Again, that makes Costco a tempting destination.

While one could argue that Costco, a long-time Motley Fool Stock Advisor pick, deals with a discount universe, it appeals across all demographics. Not only do its bulk goods appeal to penny-pinchers, but it's also nice to be able to remove kitchen cleaner, paper towels, garbage bags, or various such items from one's shopping list for months (sometimes years!) at a time.

It's hard to ignore the summer factor. Anyone who's ever been to a Costco -- or its rivals BJ's Wholesale Club(NYSE: BJ) and Sam's Club -- knows the appeal of bulk food for barbecues and summer parties. Surely you haven't missed the customers who show up with a cart stacked high with cases of soda and beer, 55-gallon drums of potato salad, and enough hamburger patties to feed an army, for example.

Costco's popularity in May is no surprise, considering just last week W.D. Crotty explored the company's latest quarter, as well as many of the things to like about Costco as an investment. Though it's trading near its 52-week high and sporting a forward P/E of 22, considering its strong management, popularity with consumers, and projected growth, it seems worthwhile to keep an eye on this one.

Alyce Lomax does not own shares of any of the companies mentioned. She's about due a trip to Costco to aid and abet in spring-cleaning.

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Seagate's Sadistically Sad Story

By Tim Beyers

The collective wisdom of the stock market is so often sadistic, giddily bidding up the stocks of companies in trouble when they cut jobs or sell poorly performing business units. Of course there's logic to such buying sprees: Painful moves such as these should boost profits long-term, which in turn should benefit investors.

Yesterday at the closing bell, the whips and chains came out at disk-drive maker Seagate Technology(NYSE: STX). Seagate said it would cut nearly 3,000 jobs due to declining market share and pricing pressure. Investors celebrated like spectators at a late-night Amsterdam peep show, throwing enough money at Seagate shares in after-hours trading to send the stock higher by $0.20 per stub. The shares are already up more than 7% in morning trading.

The workforce reductions and other cuts will lower operating expenses by roughly $150 million, including a $50 million charge to earnings during the fourth quarter, which ends July 2. Seagate had been expected to report a profit of $0.01 per share, but now that's anything but assured.

Call me boring, but I get no pleasure from Seagate's pain, primarily because the company should be nabbing profits. Think about it. PC and server sales are spiking, with many of Seagate's largest clients reaping the rewards, including Motley Fool Stock Advisor pick Dell(Nasdaq: DELL), EMC(NYSE: EMC), Hewlett-Packard(NYSE: HPQ), and IBM(NYSE: IBM). And then there's Apple's(Nasdaq: AAPL) iPod, which has changed the rules in portable entertainment by using a small hard drive supplied by Hitachi(NYSE: HIT) instead of flash memory. Indeed, digital downloading has made hard drives more important than ever.

Despite the macroeconomic trends, Seagate and close competitors Maxtor(NYSE: MXO) and Western Digital(NYSE: WDC) have failed to capitalize. Inventory management has been a big part of the problem for Seagate, as fellow Fool Jeff Hwang reported earlier this year. Rick Munarriz followed in April with a warning that the commodity nature of the industry was likely to continue hurting the drive maker.

And yet, masochistically, investors continue to throw money into its stock. Frankly, it's difficult to watch. Some things really should be done in private.

Fool contributor Tim Beyers, being an old-school tech guy, hates piling on Seagate. But he also hates to see investors' returns needlessly flogged. Tim owns no shares in the companies mentioned, and you can view his Fool profile here.

Discussion Board of the Day: GlaxoSmithKline

The hits just seem to keep on coming for the drug industry. The latest body blow came yesterday as New York Attorney General Eliot Spitzer filed suit against GlaxoSmithKline(NYSE: GSK), alleging that the British drug giant withheld information that raised questions about the effects of its antidepressant drug Paxil in children. How will the charges affect GlaxoSmithKline's stock? Will Spitzer's charges stick? Talk it over with other Fools on the GlaxoSmithKline discussion board.

Vanity and Vulgarity at Enron

By Seth Jayson

Pride has always been the fatal flaw. Just look at literature. From Homer to Hamlet and even Harry Potter, hubris is the vice that brings down the mighty.

These days, our most visible dramas tend to play out in legal action, and some pretty compelling language has come to light in the Snohomish County, Wash., Public Utilities District's (PUD) efforts to obtain compensation from Enron (OTC BB: ENRNQ.PK) for alleged market manipulation.

Recent transcripts of conversations between Enron's West Coast energy traders offer vivid proof that the firm's sophisticated, self-obsessed thieves didn't just hold a dim view of its unwitting stockholders. Public entities, like the state of California, were considered easy prey. Timothy Belden, one of two traders from the Portland office who have pled guilty and cut a deal with prosecutors, says on one tape that the firm's trading practices "just (expletive) California... to the tune of a million bucks or two a day."

As you might expect, these guys harbored no affection for the rest of us, either. You and I -- derisively referred to as "Grandma Millie" by the traders -- are looked at as ignorant rubes, ripe for the rip-off.

In one tape, after enduring a bit of ribbing about "how much money you guys stole from those poor grandmothers in California," a trader says, "Yeah, Grandma Millie, man. But she's the one who couldn't figure out how to (expletive) vote on the butterfly ballot..." The first speaker responds, "Yeah, now she wants her (expletive) money back for all the power you've... jammed right up her (expletive) for (expletive) 250 dollars a megawatt-hour."

Other tapes document traders' nefarious plans such as sending power away from areas that needed it, manufacturing grid congestion that Enron would later be paid to alleviate. They also capture the hope that then-candidate George W. Bush might someday appoint Ken Lay as U.S. energy secretary.

"How great would that be for all the players in the market?" one asked.

Pretty great, I'll bet. And given the unbelievable arrogance displayed by this gaggle of crooks -- they knew these conversations were being taped, for crying out loud -- we should be mighty glad it didn't come to pass. But most of all, we should hope that this kind of criminal conceit is punished as mightily in our courtrooms as it is in fiction.

Fool contributor Seth Jayson owns no stake in any company mentioned. View his Fool profile here.

Quote of Note

"Business is a good game -- lots of competition and a minimum of rules. You keep score with money." -- Atari founder Nolan Bushnell

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