Costco (COST) Stock Gains Big: Here’s Why

Costco Wholesale Corporation (NASDAQ: COST)

Costco Wholesale Corporation is having an incredibly strong day in the market today, and for good reason. Early this morning, the company released data that showed better-than-expected results with regard to sales. Today, we’ll talk about the results that were released, how the market reacted to the news, and what we can expect to see from COST moving forward.

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COST Releases Promising Sales Data

As mentioned above, Costco Wholesale is having a great trading session today after reporting sales results. Here’s what we saw:

  • Same Store Sales – In the month of June, COST did incredibly well when it comes to same store sales. Lately, investors have been preparing for declines. In fact, it was projected that the company would see a 1.5% decline in same store sales. However, same store sales actually came in flat, showing no decline at all. This figure excludes certain items like foreign exchange. This is promising, considering that the company reported a 1% decline in June sales last year.
  • Total Sales – Total sales at COST were also promising. The company announced that total sales increased by 3%. This brought total sales in the month to $11.33 billion. The figure is up from the $11.03 billion we saw in June last year.

How The Market Reacted To The News

As investors, one of the first things that we learn is that it’s important to keep track of the news. Any time news comes out with regard to a publicly-traded company, we can expect movement in the market. Obviously, good news causes upward movement while bad news leads to downtrends. In this particular case, the news released with regard to Costco was overwhelmingly positive. So naturally, we’re seeing gains in the value of the stock today. Currently (2:00), the stock is trading at $163.09 per share after a gain of $7.08 per share, or 4.54%, thus far today.

What We Can Expect To See Moving Forward

Moving forward, I have an overwhelmingly bullish opinion of what we can expect to see from COST stock. The reality is that the company is showing positive movement in a month where declines were expected in same-store sales. With revenue up, earnings are likely positive as well.

The truth is that, at the moment, Costco has an inherent competitive advantage. The company focuses on wholesale goods. After charging a membership fee, COST offers everything from food, to clothing, tires, and more, at wholesale rates.

Currently, economic conditions around the world are concerning. As a result, consumers are looking to save money. This is actually good news for COST. Because the company sells products at lower rates than retail outlets, more and more people are likely to join the club and shop there. All in all, I’m expecting to see continued positive news out of Costco.

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What Do You Think?

Where do you think COST is headed moving forward and why? Join the discussion at TalkTRENDZ from CNA Finance!

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