15 Best Stocks to Buy According to Hosking Partners

5. Costco Wholesale Corporation (NASDAQ:COST)

Hosking Partners’ Stake Value: $77,227,541

Percentage of Hosking Partners’ 13F Portfolio: 2.85%

Number of Hedge Fund Holders: 71

Costco Wholesale Corporation (NASDAQ:COST) operates a global network of membership warehouses under the “Costco Wholesale” brand, offering high-quality, brand-name products at reduced prices.  Costco showed steady adjusted U.S. core comparable sales growth of 5.7%, supported by increased customer traffic both in the U.S. and globally. The discretionary segment saw same-store sales growth in the mid- to high-single digits in June, slightly improving from the previous month. Additionally, e-commerce sales increased by 15.4%, up from 14.8% in April.

Costco Wholesale Corporation (NASDAQ:COST) is a strong investment opportunity, backed by its solid financial performance and strategic advantages. In Q4 2024, the company met market expectations with earnings per share of $5.09. Despite a challenging retail environment, Costco saw robust sales growth, especially in membership fees and net sales, which drove revenue. On June 7, Deutsche Bank reiterated its Buy rating on Costco with a price target of $925, citing the company’s resilience in a volatile consumer market.

Costco’s membership model is a significant asset, generating $4.3 billion in profit from fees in FY 2023, with a high renewal rate of about 90%, indicating strong customer loyalty. The company’s expansion plans, including the annual opening of around 30 new warehouses and a focus on international markets like China, offer substantial growth potential.

Moreover, Costco has proven resilient during economic downturns, such as the COVID-19 pandemic, and its e-commerce business grew by 9.7% in FY 2023. These factors underscore Costco’s potential for continued revenue growth and leadership in the retail sector.

ClearBridge Sustainability Leaders Strategy stated the following regarding Costco Wholesale Corporation (NASDAQ:COST) in its Q2 2024 investor letter:

“Consumer staples holdings were also standouts in the quarter, such as Costco Wholesale Corporation (NASDAQ:COST), which continues to execute well and delivered better than expected earnings, helped by strong traffic driving better expense leverage. Customers also looked to be shifting toward more discretionary purchases.”