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Did Costco's (COST) September Comps Impress Investors?

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Shares of Costco Wholesale CorporationCOST rose roughly 4% following the company's announcement of its comparable-store sales (comps) results for the month of September, on Oct 7. The warehouse retailer reported flat comps for the month, following a 2% decline recorded in August and flat comps registered in July. Comps for September reflect an increase of 3% at the company's U.S. locations, offset by a decline of 10% and 6% at its Canadian and other international locations, respectively.

However, excluding the effect of deflation in gasoline prices and the adverse impact of foreign currency fluctuations, Costco's comps for the month under review rose 8%, portraying comparable sales growth of 8%, 11% and 8% across its U.S., Canadian and international outlets, respectively.

On the sales front, this Zacks Rank #3 (Hold) company reported a 2% jump in net sales to $10.75 billion for the five-week period ended Oct 4, 2015.

We believe that Costco continues to be a dominant retail wholesaler based on the breadth and quality of merchandise it offers. The company's strategy to sell products at heavily discounted prices has helped it to remain on the growth track as cash-strapped customers continue to reckon Costco as a viable option for low-cost necessities.

Costco, which competes with Wal-Mart Stores Inc. WMT , currently operates 687 warehouses, which include 481 in the U.S. and Puerto Rico, 89 in Canada, 36 in Mexico, 27 in the U.K., 23 in Japan, 12 in Korea, 11 in Taiwan, 7 in Australia and 1 in Spain. Costco plans to open 12 more warehouses before the end of the current calendar year.

Stocks to Consider

Better-ranked retail stocks that appear promising include Target Corporation TGT and Burlington Stores, Inc. BURL , both carrying a Zacks Rank #2 (Buy).

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

WAL-MART STORES (WMT): Free Stock Analysis Report

TARGET CORP (TGT): Free Stock Analysis Report

COSTCO WHOLE CP (COST): Free Stock Analysis Report

BURLINGTON STRS (BURL): Free Stock Analysis Report

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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.


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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