If you are like me, then you are always looking for great companies that are on sale.
What makes the company a bonus buy is when it also pays a dividend.
Costco Wholesale Corporation (COST) is one of those stocks for me that I have had my eye on for a long time.
It has been on my watchlist and I am just waiting for it to come down to the price I feel confident about so I can jump in at a comfortable margin of safety price.
Unfortunately, most stocks have reached all-time highs since the market crashed hard in March, and COST is no exception.
COST has been on a tear the past several months and it appears they won’t be slowing down anytime soon.
Now, with all that being said, I still believe COST can add great value to your portfolio due to its strong balance sheet, low debt, and increasing dividend.
First off, for anyone who doesn’t know what COST does, they are a wholesale members-only retail chain.
COST sells everything from food, electronics, to even clothes. They are famous, too, for a $1.50 hotdog and a soda deal that hasn’t changed in price in decades.
What makes them so appealing to so many people is the fact that COST sells in bulk which allows their members to get larger quantities of items at a better price point than other stores.
COST by the numbers
Over the last ten years, COST has increased its earnings per share growth (EPS) by 13.86%.
Operating cash per share (OCPS) has increased by 13.42%, and sales growth has remained steady averaging 7.42%.
Return on equity (ROE) has averaged 22.36% and return on invested capital (ROIC) has averaged 15.84%.
COST has also managed to increase its dividend year after year, which tells me that they are keeping their debt low, cash high, and the investors in mind.
The current dividend stands at $0.70 per share paid quarterly, which comes out to $2.80 per share yearly.
Although this number does bring a high yield, it is still a solid number from a solid company.
Now that is the kind of business I can invest in.
For me, the only current downside is where COST has been trading at the past couple of months.
The share price has been consistently over $300 since the end of June and has even hit all-time highs during this pandemic.
Since COST has managed to continue sales growth and cash on hand while so many other businesses are struggling to keep their doors open.
I would venture to think that COST isn’t going to get any cheaper over the next several months.
With that being said, one Yahoo Finance analyst has COST currently as a buy with a one year estimated target price of $352.52.
If you are willing to trust the numbers and have some extra cash on hand, I would highly suggest giving this wonderful company some consideration.