5 Boring Stocks That Make Money

1. Costco Wholesale Corporation (NASDAQ:COST)

Number of Hedge Fund Shareholders: 64

Trailing 12 Month Net Income: $5.84 billion

Topping the list of boring stocks that make money is Costco Wholesale Corporation (NASDAQ:COST), another boring retailer that consistently makes a lot of money. Costco’s actually been in the midst of a pretty impressive growth period since the pandemic began, though that appears to be moderating now. It grew revenue by about 50% between 2018 and 2021, while EPS surged by 58% to $13.17. As inflation pressures consumers’ wallets, Costco is likely to become even more attractive to members and non-members alike given its refusal to raise prices on some items for the sake of margins. That makes it a great, if somewhat boring business in good economic times and bad.

There’s been an increase in the amount of hedge fund ownership of Costco Wholesale Corporation (NASDAQ:COST) for four straight quarters, with the number of smart money managers long COST rising by 16% during that time. Dmitry Balyasny’s Balyasny Asset Management built a stake in Costco during Q1, while Qing Li’s Sciencast Management did so during the fourth quarter of 2021.

The Cooper Investors Global Equities Fund is more bullish than ever on the strength of Costco Wholesale Corporation (NASDAQ:COST)’s buying power and the company’s growth runway, as detailed in the fund’s Q3 2022 investor letter:

“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.”

For more of the latest stock picks worth considering for your portfolio, check out 10 Best TSX Stocks To Buy and 10 Best Global Dividend Stocks To Invest In.

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