By traditional metrics, it is not easy to find what we would generally call a value stock. Despite depressed earnings and unfavorable conditions for the next couple quarters, the market has risen 30% since April 1st. That combination has left us with a market where a large percentage of stocks either have stretched valuations or are not profitable at all. However, with 3,800 stocks on the public markets, there are bound to be a few exceptions. One stock that I believe fits that bill and presents a good value proposition is BJ's Wholesale Club (NYSE:BJ).
BJ's Wholesale Club is a leading warehouse club operator on the East Coast of the United States. The company sells grocery items as well as general merchandise and currently sports 218 warehouses and 146 gas stations in 17 states. BJ's draws members because of its low-priced merchandise, and in the balance of the article, we will look at why BJ's stock seems to offer a bargain to investors as well.
Image Source: BJ's Wholesale Club
Increasing Market Share
BJ's operates in the warehouse retail world where bulk purchases and discounts rule the day. Competitors are formidable and include Costco (COST) and Walmart's (WMT) Sam's Club. I'm not sure we can make a definitive statement that BJ's is gaining market share, but recent results put forth in the company's Q1 press release seem to imply as much.
Comparable club sales at BJ's, excluding gasoline sales, increased by 27.0%, including digitally enabled sales growth of 350% for the first quarter of fiscal 2020."
The 27% uptick at existing locations blew away the 1% uptick during the prior full fiscal year. That result also compared favorably to the 10% increase that Sam's Club reported, and to Costco's 8% boost in the first quarter.
The Value Proposition
Below, we'll look
