The Zacks Analyst Blog Highlights Costco Wholesale, Dollar General, Target and Ross Stores

For Immediate ReleaseChicago, IL – November 6, 2024 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Costco Wholesale Corp. COST, Dollar General Corp. DG, Target Corp. TGT and Ross Stores ROST.Here are highlights from Tuesday’s Analyst Blog:Costco Up +17% in 6 Months: Too Late to Buy COST?Costco Wholesale Corp. has captured the attention of investors with a remarkable increase in its stock price over the past six months. The stock has rallied 17.2%, outpacing the industry's modest rise of 8%. Costco's unmatched scale and operational capabilities have also helped it outperform the broader Retail-Wholesale sector and the S&P 500 index's growth of 10.6% during the same period.The surge in COST stock price is indicative of the company's strong fundamentals and its ability to thrive in a competitive retail landscape. Known for its bulk offerings and membership model, Costco has demonstrated resilience amid economic fluctuations, appealing to consumers seeking value and quality.This impressive uptick in the stock price has left many investors pondering whether they missed out on a lucrative opportunity or if there is still potential for growth. Closing yesterday's trading session at $886.07, Costco stock is currently 4.1% below its 52-week high of $923.83 attained on Sept. 13, 2024.Technical indicators further support Costco's strong performance. The stock is trading above both its 100-day and 200-day moving averages, signaling robust upward momentum and price stability. This technical strength reflects positive market perception, and confidence in Costco's financial health and prospects.Costco's Membership Strategy: Key to Ongoing SuccessCostco's resilient business model, anchored in its membership-based structure, continues to drive significant growth. The company benefits from high membership renewal rates, combined with efficient supply-chain management and bulk purchasing power, enabling it to maintain competitive pricing. This robust model has allowed Costco to weather economic downturns.Members pay an annual fee to access Costco's warehouses, where they enjoy significant discounts on a wide range of products. This approach not only generates a steady inflow of revenues but also fosters a sense of exclusivity and value among members. The recent increase in COST's membership fees is expected to further enhance revenue streams, though it will also test customer loyalty in the long run.In addition to its strong membership model, Costco continually adapts to market trends and evolving consumer preferences. The company regularly refreshes its product offerings, balancing everyday essentials and unique, high-demand items. Through diligent market analysis and tailored product selections, COST has expanded its domestic and international presence.In fiscal 2024, Costco opened 30 warehouses, including one relocation. The company has ambitious plans for fiscal 2025, aiming to add 29 locations, including three relocations. This expansion is designed to enhance its market footprint and drive top-line growth. The Zacks Consensus Estimate projects sales growth of 7.5% for fiscal 2025 and 6.5% for fiscal 2026, reflecting strong market confidence in Costco's growth trajectory.COST's digital and e-commerce initiatives are gaining momentum, contributing significantly to overall sales growth. The company reported an impressive 18.9% increase in e-commerce comparable sales in the fourth quarter. Deliveries through Costco Logistics rallied 29% year over year in fiscal 2024. As consumer preferences increasingly shift toward online shopping, Costco is positioning itself to capture a larger share of this growing market.A Sneak Peek into Costco's Financial HealthCostco's sturdy balance sheet equips it to deal with cyclical downturns and tap growth opportunities. With cash and cash equivalents of $11,144 million (including short-term investments of $1,238 million) at the end of the fourth quarter of fiscal 2024, Costco looks quite comfortable from the liquidity point of view.Solid cash flow generation allows COST to raise dividends consistently. The company generated an operating cash flow of $11,339 million for the 52 weeks ended Sept. 1, 2024. COST's payout ratio is 29, with a five-year dividend growth rate of 13.1%. The company last raised its quarterly dividend 13.7%.How Do Earnings Estimates Measure Up for COST?Reflecting the positive sentiment around Costco, the Zacks Consensus Estimate for earnings per share has seen upward revisions. Over the past seven days, the consensus estimate for the current and next fiscal years has increased by a penny each to $17.76 and $19.36 per share, indicating year-over-year growth rates of 10.2% and 9%, respectively.See the Zacks Earnings Calendar to stay ahead of market-making news.Valuation Analysis: Is Costco's Premium Price Justified?Costco's stock is trading at a significant premium to its industry peers, such as Dollar General Corp.Target Corp. and Ross Stores. Costco's forward 12-month price-to-earnings ratio stands at 49.10, higher than the industry's ratio of 28.75 and the S&P 500's ratio of 21.71.Now, the question arises: Is Costco's current price warranted or overvalued in today's market?Costco's premium valuation reflects investor confidence in the company's ability to deliver consistent growth and maintain its competitive advantage. While the stock's current price may seem high, its robust business model, strong customer base and reliable revenue streams justify the premium.Is it Too Late to Invest in COST Stock?Costco's resilient membership model and adaptability to evolving market trends firmly establish its leadership in the retail sector. While the stock's premium valuation may make some investors hesitant, Costco's diverse product mix, steady store traffic and strong pricing power help offset these concerns. With ample liquidity to weather economic shifts, the company remains well-equipped for the future. Holding a Zacks Rank #2 (Buy) at present, Costco's stock offers promising upside potential, making it an attractive option for investors looking for stability and growth in the retail space. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.Why Haven't You Looked at Zacks' Top Stocks?Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.Today you can access their live picks without cost or obligation.See Stocks Free >>Media ContactZacks Investment Research800-767-3771 ext. 9339support@zacks.com                                      https://www.zacks.com                                                   Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Target Corporation (TGT): Free Stock Analysis Report Dollar General Corporation (DG): Free Stock Analysis Report Costco Wholesale Corporation (COST): Free Stock Analysis Report Ross Stores, Inc. (ROST): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks