Royal Assets - Why you should include this retail company in your portfolio

NORTH BRIDGE ROAD, Singapore - April 10, 2023 - PRLog -- Even now, when the S&P 500 (^GSPC) is in a bear market, COST shares beat the majority of its rivals. As of late October, the stock is down 12% year to date, compared to a 20% decrease in the overall market.

Is this a buying opportunity, or will COST stock continue to underperform? Let's look at some of the reasons why you should add the retailing stock to your portfolio right now.

COST's most recent financial report bore all the signs of a market leader. Sure, growth rates have decreased in comparison to the previous year's brisk outcomes. Customers, however, continue to prioritize their COST visits.

Customer traffic increased by 5% in the fourth-quarter period that concluded in late August in the United States. These customers also spent 10% more each visit, resulting in a 16% increase in comparable-store sales. After adjusting for increased gas prices, COST still achieved a 10% rise – a little more than Walmart's Sam's Club.

Rising customer loyalty is an excellent indicator of a successful firm, and COST is a market leader in this area. This quarter, 92.6% of its members elected to renew their yearly subscription. This rate was also up 0.3% from the previous quarter. In other words, as costs rise due to inflation, buyers are getting more drawn to COST.

Remember that, unlike typical shops, COST earns most of its money from subscription fees rather than product markups. That consistent flow of profit is vital in any market scenario, but especially in these difficult financial circumstances.

These victories help to explain why COST's stock is rarely available for purchase on the open market. True, its present valuation of 0.9 times annual revenues is lower than the 1.25 times that investors were paying only a few months ago. However, you must pay a premium to buy this stock when compared to other stores such as Walmart Inc. (WMT) or Target Corporation (TGT).

Purchasing the stock now also exposes an investor to increased risks of a consumer spending slowdown or recession in the immediate run. COST has done well in these selling circumstances in the past, but its sales and profitability outlook is a little cloudier right now.

Royal Assets Pte. Ltd. (https://royalassetsltd.com) is a family business that treats its investors like family. Honesty and transparency are core to our Investment Philosophy and key to our service offering.