Costco Gains More Than 50% YTD: Solid Comps Run a Key Driver

Costco Wholesale Corporation COST has been a preferred stock for investors for quite some time now. Notably, this Zacks Rank #2 (Buy) stock has surged as much as 51% so far this year, outpacing the industry’s growth of 43.4%. The splendid run can be largely attributable to Costco’s impressive comparable sales (comps) run, which continued in October.

Costco is benefiting from its robust efforts to keep pace with the changing retail scenario. To this end, the company’s better price management, solid membership trends and increasing penetration of the e-commerce business are yielding results. To top it, a strong labor market and favorable consumer sentiments are broader factors working in favor of Costco.

October Retains Solid Comps Trend

Courtesy of such upsides, Costco kept its robust comps trend alive in October. Comps for the month rose 5.7%, following an increase of 4.2% in September, 5.5% in August, 5.6% in July, 5.4% in June and 4.2% in May. Comps for October reflect a rise of 6.5% in the United States, 4.9% in Canada and 2.1% in Other International locations.

Excluding the impact of foreign currency fluctuations and changes in gasoline prices, comps for the month rose 6.3%, with 6.8%, 6.5% and 3% increase in the United States, Canada and Other International locations, respectively.

Meanwhile, net sales improved 6.8% to $11.92 billion in the month under review, following a rise of 5.6%, 6.9%, 7.9%, 7.5% and 5.9% in September, August, July, June and May, respectively.

Costco is also steadily expanding e-commerce capabilities in the United States, Canada, the U.K., Mexico, Korea and Taiwan. E-commerce comps grew 16.5% in October, following an increase of 17.8%, 23.9%, 21.3%, 15.7% and 20.2%, in September, August, July, June and May, respectively.

Wrapping Up

Costco remains one of the dominant warehouse retailers based on the breadth and quality of merchandise offered. In fact, its strategy of selling products at heavily discounted prices has helped it remain on growth trajectory. Additionally, a differentiated product range enables the company to provide an upscale shopping experience for members. Such efforts are likely to continue driving traffic across online and brick-and-mortar platforms.

Other Retail Stocks You Can’t Miss

Walmart WMT, with a Zacks Rank #2, also reflects a solid comps run. Further, the company has a robust earnings surprise trend. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Target TGT, with a Zacks Rank #2, has a long-term earnings per share growth rate of 7.1%.

Burlington Stores BURL, with a Zacks Rank #2, has a long-term earnings per share growth rate of 15.9%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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