Recession Is Good News for Costco

Consumers are buying up industrial-sized bags of coffee and other bulk household items in recessionary times and that is great news for Costco Wholesale Corp. (COST), according to analysts at Goldman Sachs.

Goldman's Adrianne Shapira said in a note to clients:

Costco is well positioned to gain share in the challenging macro backdrop, as its combination of superior merchandising, compelling prices and gas sales have driven industry leading traffic trends. We see little risk to sales in the near term.

Ms. Shapira rates the shares a buy with a C$72 price target, but trimmed her fiscal 2009 and 2010 to C$3.20 from C$3.22 and to C$3.60 from C$3.62, respectively, as the impact of high gas prices remains a risk to margins, she said.

The company is also a sound buy given its depressed valuation relative to historical levels, she said, trading at 20 times her 2010 earnings estimate versus its historical range of 18 times to 23 times earnings. She expects it will return to the midpoint of the historical price to earnings range.

Comments

[TripRockYeti:]

Analysts at Goldman Sachs? Your kidding me right? They don't know..Sh!T..I wouldn't believe a word they say..Analysts today are nothings compared to those of say 15 yrs. ago..its ALL FLUFF Btw, does Costco sell Fluffer-Nutter?

2008 Oct 10 11:38 AM