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Non-Tech : Costco, slow but sure? -- Ignore unavailable to you. Want to Upgrade?

To: Toby Zidle who wrote (764)	11/11/1998 12:58:00 PM
From: stock_bull69	Respond to of 1147

NEW YORK, Nov 10 (Reuters) - Shares of membership merchandising firm BJ's Wholesale Club Inc. <BJ.N> surged while Costco Cos. Inc.'s <COST.O> fell Tuesday, mostly due to technical reasons. BJ's shares gained 2-1/8 to 38, while Costco shares fell 1-5/8 to 58-3/8. Lazard Freres analyst Todd Slater said that the discrepancy in the trading activity came about because BJ's was trading at a substantial discount to Costco. "Costco trades at a premium because of a liquidity difference in the two companies, which is important to mutual fund managers," he added. Costco spokesman Bob Nelson said his company's stock was probably giving up some of the sharp gains it made last week, when it hit 62-3/4, a high not seen since July 23. "The stock was particularly strong last week, maybe there's some profit-taking," the Costco spokesman said. BJ's officials were not immediately available for comment. Both stocks were regaining ground from the week of Oct. 19, when BJ's and Costco closed that day at 36-5/16 and 44-13/16, respectively. Slater was projecting BJ's to earn $2.09 for the year and the stock was trading at 17.2 times earnings based on yesterday's stock price, compared with Costco which was trading at 25.9 times earnings. "BJ's is benefiting from the valuation comparison," Slater said. Besudes, BJ's could expand more in the United States than Costco, since Costco already is a larger company than BJ's. "I think the world is beginning to discover BJ's as a viable safe, defensive growth play in the retail sector," Slater said. He noted that both retailers sell a high percentage of groceries, making them a haven in volatile markets. "Both stocks have the same safety factor from a merchandising point of view, although Costco is a more expensive stock," Slater said.

To: Toby Zidle who wrote (764)	11/11/1998 3:01:00 PM
From: WalleyB	Read Replies (1) \| Respond to of 1147

I agree with everything you said and believe it applies to stocks in general. It may well apply to COST and I hope it does. I should have said that under certain conditions institutions of late have changed their thinking and are opting to sell off their stocks because of the buy back announcements. I can't remember where I read that or under what conditions the dimmer view is taken. Seems to me it might have been in IBD. However I think one of the changes in the thinking has been that the market is too iffy these days and institutions are not taking a chance on what the company's motives are for buying back the stock. COST is talking about using the stock to offer it as an incentive to its employees, that may be the reason folks are cool to the stock right now. One thing is certain its sinking again since the announcement has had time to sink in, at least it would appear that way. At any rate I mentioned it to get some feedback and thank you for your contribution. jim