Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Wallace Rivers who wrote (17532)	8/7/2003 4:03:51 PM
From: richardred	Read Replies (1) \| Respond to of 78973

IMO-long term very solid. I truly believe warehouse clubs are here to stay. Wal-mart knows it, or they wouldn't have opened up Sam's Club. Consumer Suppliers Like P & G and Gillette know it to. A bigger % of their sales are now being captured by wholesale clubs. Most likely at the demise of Grocery chains. IMO-Costco is well established, solid and here to stay. Why?- Walmart doesn't want to lose regular store sales at the expense of it's wholesale club. Therefore Costco can compete on margins without having to worry about losing regular retail sales. They however still do have BJ's to compete with . My own favorite Caveat: "Listen to what others have to say, but do what you think is right yourself" RR

To: Wallace Rivers who wrote (17532)	8/7/2003 11:23:42 PM
From: Paul Senior	Read Replies (2) \| Respond to of 78973

Regarding Costco, we want to separate the business from the stock. Imo anyway. The business is great from my customer perspective. I like the merchandise, food, prices, service, relatively quick checkout, free food tastings. Looks like others agree. My local stores are generally pretty busy it seems to me (and I try to shop off-hours). Considering just the stock, I would try to categorize the stock as either a value stock or a growth stock. When I bought Sept.-Nov. of last year between $34 and $31, I considered it a growth stock. Now I'll want to consider re-categorizing it. After price drop of past couple days, it's still no value stock. If it's a growth stock, it's a busted one. Sales are up, but earnings are now expected to be similar to last year ($1.48-$1.50 vs. $1.48, diluted,). So I want to know if the earnings problem is systemic or readily fixed. Marketwatch says, "On a conference call with analysts, Costco said that half of its profit shortfall is the result of pricing skirmishes with Sam's Club, particularly in the high-margin commodities and drugs categories. Though the aggressiveness in cutting costs to consumers is just short of a pricing war, analysts worried that it could go on for some time." So it seems to me that some major issues hindering bottom line performance aren't going to go away. I see COST still in an expansion mode (opening new stores), and I expect that COST's good management will somehow work through and resolve some of the issues that are hindering bottom line performance. COST had a drop in earnings from 2000 to 2001, and the company came back from that. So did its stock if one bought after the stock had abruptly dropped. I acknowledge that the stock price now is relatively high with a p/e of about 20. OTOH, in the past decade COST has sported a p/e that high or higher in most every year. I'm holding on to my shares, and I'm considering adding a bit if COST drops a little more. I'd be guessing that the bad news is mostly out, and that with the passage of time, we'll see some improvement in bottom-line performance (in addition to continued same-store sales growth) and a recovery in the stock price. Jmo, and I've been wrong many, many times Paul Senior