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A 'Great Buying Opportunity' in Costco: 10 Key Discussion Points - COST review

Join Hedgeye's Consumer Staples Team – led by Howard Penney – for a Black Book presentation on Costco Wholesale Corporation (COST), which is on our Best Ideas List as a Long. We believe that the near term pressure the stock is experiencing is providing a great buying opportunity in a best in class company. The call will take place on Thursday July 20, at 1pm ET.

Email sales@hedgeye.com for more information.

KEY DISCUSSION POINTS:

  1. COST's membership base is one of their strongest assets. Membership renewals in the U.S. and Canada hold at a steady 90%, while just slightly lower worldwide at 88%. In addition to membership renewals, COST has experienced robust growth amongst their executive member base, which represents two-thirds of sales and a third of the member base.
  2. Deflation pressures are lifting off the business which COST will be able to realize over time. And while comping over relatively easy comps there could be some upside driven by inflation.
  3. Although they are lapping over the primary benefit of the switch to the Citi/Visa card, this card will continue to benefit them due to their improved agreement and comparative favorability of a Visa card vs. Amex for other retailers.
  4. COST is a well-oiled machine, boasting very strong operating metrics. We will run you through our sustainability model to prove it!
  5. Survey on how many people are both an Amazon Prime and Costco member, which will also dive into why consumers use Costco specifically.
  6. Private label strength.
  7. E-commerce strategy is an area of opportunity. How badly do they need it?
  8. In-depth top-line and margin analysis.
  9. Inflation/deflation deep dive.
  10. AMZN/WFM merger - what we think of it and who we think the winners and losers will be. Hint: we see KR and UNFI as companies that will underperform in the new food retail landscape. 

CALL DETAILS

Ping sales@hedgeye.com for more information. Please note if you are not a current subscriber to our Consumer Staples research there will be a fee associated with this call.  

ABOUT HEDGEYE

Hedgeye Risk Management is a leading independent provider of real-time investment research. Focused exclusively on generating and delivering investment ideas, the firm combines quantitative, bottom-up and macro analysis with an emphasis on timing.

The Hedgeye team features some of the world's most regarded research analysts - united around a vision of independent, uncompromised real-time investment research as a service.