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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (17539)	8/8/2003 2:24:55 AM
From: - with a K	Read Replies (1) of 78993

Great comments about Costco, but as a Costco member since 1984 and a former Costco shareholder, I have to agree with Paul: the company is so much more attractive than the stock. Admittedly, I love shopping there. Their buyers are good and tough, know quality, and work with the suppliers to help lower costs. Parking lots and lines are always full. People are always helpful. They keep refreshing the inventory and always seem to pleasantly surprise. But the stock is a different animal. I'm not attracted to the thin margins and a business model that depends on expansion and competing on lowering prices. Yesterday's WSJ story about rising inventory, rising worker's comp and health care expenses are troubling if I were a shareholder. As the WSJ put it yesterday, "Customers love Costco...there is clearly little wrong with the store concept.....The problem is SG&A costs are too high....Costco can't hide rising costs....Can a company that does so well by customers and employees possible be a bad investment?" I sold my shares a few years ago when I started getting troubled by its valuation and growth prospects. But I still shop there. - Kris / Seattle

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