5 Best Retail Stocks to Buy Now

4. Costco Wholesale Corporation (NASDAQ:COST)

Number of Hedge Fund Holders: 69

Costco Wholesale Corporation (NASDAQ:COST) is a Washington-based membership-only big-box retailer. The company leads as the biggest retailer in the world in numerous selected categories.

In a research note issued on October 28, Simeon Gutman at Morgan Stanley stated that 2023 could be a special year for Costco Wholesale Corporation (NASDAQ:COST). The analyst formed this opinion after meeting with CFO Richard Galanti and other members of the executive leadership team. Gutman highlighted that the overhang related to excess inventory is slowly diminishing as Costco Wholesale Corporation (NASDAQ:COST) is working on enhancing unit growth and gaining market share. This is the basis of the growth story for one of the best retail stocks. The analyst has given Costco Wholesale Corporation (NASDAQ:COST) an Overweight rating with a target price of $525.

Cooper Investors shared its outlook on Costco Wholesale Corporation (NASDAQ:COST) in its Q3 2022 investor letter. Here’s what the firm said:

“The US economy continues to run hot – the labour market is extremely tight and a number of executives we spoke to described their challenges in retaining staff and preventing competitors from poaching talent. Industrial companies in particular continue to see record backlogs, with the easing of logistics and supply chain constraints only just starting to have an impact on deliveries and lead times.

In terms of inflationary pressures, the vast majority of our holdings have been able to leverage strong market positions and stakeholder relationships to push pricing through in 2022 such that minimal impact to earnings has occurred. Clearly this is not a lever than can be pulled indefinitely but the more experienced management teams have kept some of their powder dry. Our meeting with management at Costco in Seattle was memorable for several reasons but one was their latent ability to increase member pricing which they have not done in over 5 years (and thus likely to do in 2023)…

…To conclude we’ll return to our meeting with Costco mentioned earlier. The business quality is no secret after decades of incredible execution, but the meeting gave us renewed conviction around Value Latencies in terms of the runway for growth, the focus on enhancing customer value, Costco’s vast buying power (it purchases 30% of the world’s jumbo cashews as one example) and management’s feral focus on the business model and cost discipline.”

Costco Wholesale Corporation (NASDAQ:COST) was held by 69 hedge funds as of Q3 2022.