Costco
James is Costco worth buying at this point?
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Answer
Hi Arthur,
Short answer is we like Costco (COST US) and see it as a very defensive / recession proof, high quality business – a stock we have had on our Hitlist for some time however we bought Tesco (TSCO UK) in the UK instead given relative valuation and turnaround potential there. Now after COST has rallied 25% from it’s lows, we think it’s less compelling. If pressed, buying part now and leaving room to average into a pullback would be our preferred strategy. Walmart (WMT US) into results driven weakness is also one to consider – higher risk around US consumption given their product mix but it trades on 22x versus Costco’s more defensive model on ~40x.
