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

To: Paul Senior who wrote (17539)	8/8/2003 12:52:57 AM
From: Spekulatius	Read Replies (1) \| Respond to of 78984

Re: Costco - I agree with you that Costco is neither a growth nor a value stock. PE is about 20 now. I have it on my radar screen but I do not on the stock. I would become interested when it falls to 25$. I don't think the business model is broke. Costco is the price leader in most categories it chooses to compete and despite having one of the lowest growth margins in the retail sector (<20%), the company is fairly profitable. The Internet may be a threat in some categories (electronics, jewellery) but who orders a rug, a pair of jeans,a case of beer or a refrigerator over the internet? I am member and for me as a single person it pays off - a family without doubt will get back the membership fees many times.

To: Paul Senior who wrote (17539)	8/8/2003 2:24:55 AM
From: - with a K	Read Replies (1) \| Respond to of 78984

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