Wal-Mart Stores, Inc. (WMT): Why You Should Buy Costco Wholesale Corporation (COST)?

Brief Competitor Analysis

Costco competes directly with Wal-Mart Stores, Inc. (NYSE:WMT)’s Sam’s Club in the domestic market. Sam’s club contributes approximately 12% to the total revenues of Wal-Mart Stores, Inc. (NYSE:WMT). It offers a large variety of goods including both hard and soft goods, in addition to several grocery items. Like Costco, it charges a membership fee, however its prime consumers purchase in large volumes hence it still provides high value for money. This business unit capitalizes vastly on the massive bargaining power of Wal-Mart Stores, Inc. (NYSE:WMT), which enables it to offer a large variety of goods to its consumers at cheap prices. Moreover, the entire business model is highly distinctive and contemporary with not many players competing in this space.

Why Should you Buy this Stock?

In addition to several growing prospects that Costco Wholesale Corporation (NASDAQ:COST) enjoys, investors must realize it has a unique business model and probably will benefit from large international acceptance. Costco currently operates more ware house stores in US; however going forward international expansion offers a huge opportunity. Furthermore, the company is focused on increasing the executive member base, which implies a higher revenue volume and membership renewals.

The company recently turned its attention to improve the ecommerce platform, as it completely comprehends the opportunity it presents. Costco swanks, approximately 90% of its merchandise offered on the ecommerce platform is different from store offerings. Hence, the company does not worry about any probability of sales cannibalization. I believe, Costco Wholesale Corporation (NASDAQ:COST) has strong fundamentals and promises robust pay-outs in the future.

The article Why You Should Buy Costco? originally appeared on Fool.com and is written by Ashit Gulati.

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