Costco Wholesale (
) has outperformed its rivals this year as consumers continue to
flock to its discount warehouses despite an increase in
Costco's shares are up 26% this year, about double the S&P
500's rise and well above the gains at fellow big-box
discountersWal-Mart Stores (
) andTarget (
The stock broke out above a split-adjusted 97.63 flat-base buy
point in strong trade Nov. 30 but has since pulled back and is
just above the entry.
"Costco continues to be a dominant retail wholesaler based on
the breadth and quality of the merchandises it offers," Zacks
Equity Research said Dec. 11.
It added that "cash-strapped customers continue to reckon
Costco as a viable option for low-cost necessities," helping the
company grow despite the weak economy.
Costco reported Dec. 12 that fiscal first-quarter profit rose
19% to 95 cents a share, edging above Wall Street estimates. But
it was down from a 29% jump the previous quarter and marked the
first time in five quarters that profit growth slowed.
Revenue for the period rose 10%, down from Q4's 14% gain.
) reiterated its neutral rating on the stock Friday, saying
Costco has benefited from a fee increase enacted late last year.
But it cited technology investments and possible food inflation
in 2013 as risks to its outlook. Low margins amid stiff
competition are also a concern.
Costco CEO Craig Jelinek asked President Obama last month not
to raise taxes on the middle class as part of a deal to avert the
"fiscal cliff," a combination of tax hikes and spending cuts set
for Jan. 1.
The company soon after announced a special cash dividend of $7
a share to reward shareholders ahead of an expected increase in
dividend tax rates.
The one-time payout made Dec. 18 came on top of the regular
quarterly dividend of 27.5 cents a share, which is good for an
annual yield of 1.1%, below the 2.1% average for the S&P 500.
Costco has nearly tripled its dividend since 2004, boosting it
even during the recession.
Costco's 82 Composite Rating tops the nine-member Retail-Major
Discount Chains industry group.