Supply chain issues and inflation continue to deteriorate retail stocks. Moreover, people would still want to eat despite soaring prices. The past month saw Target’s (TGT) stock plunging by 26.9%, whereas Walmart (WMT) dropped 16% in the same timeframe.
These figures reflect macroeconomic uncertainty, not the results announced by each company. Indeed, retail stocks have had a challenging atmosphere as most players trade at lower prices. However, the reality is current conditions in the market favor the leading retailers.
Target and Walmart have leverage as far as the supply chain is concerned. Though the chains saw issues, with a massive inventory and inadequate in some cases, these were milt issues because of the enormous buying power the chains boast.
Costco (COST) also had its stock plunging by 11% within the previous 30 days. That doesn’t have anything to do with Costco’s actual earnings, as the company reported impressive Q3 results.
The net income grew to $1.353 billion for the quarter, higher from $1.22 billion one year ago. Moreover, net sales maintained an upside stance, gaining 16.3% to $51.61 billion, higher than last year’s Q3 $44.28 billion.
The third quarter’s comparable sales show US 16.6% up, Canada up by 15.2%, other International 5.7% better, while the company’s total gain was 14.9%. Though these figures are impressive, they aren’t what matters most.
Sales show how happy warehouse club members are, surging numbers reflecting an attractive signal. However, growth and membership retention are crucial when judging the firm’s financial health.
Should You Purchase Costco Stock?
Costco’s business can thrive amid challenging economic times. The chain ensures value for the members, a crucial factor during surging prices. Though supply chain and inflation can trigger price increases, Costco works in all possible ways to maintain affordability.
Moreover, Costco’s gas is available at the lowest price you will get in a gas station. That’s lucrative for membership sales, with gas prices exploring historic highs.
The best thing is that the company can flourish despite economic conditions, and inflation should attract more individuals to the chain. Also, Costco knows how to retain acquired members. You can consider their shares amidst challenging times in the financial world.
Editorial credit: TK Kurikawa / shutterstock.com