Jim Cramer says you should “buy, buy, buy” Costco Wholesale (COST) and praises “incredible bargains” in stores
We recently published a list of Jim Cramer’s latest calls: Top 10 stocksWith Costco Wholesale Corporation (NASDAQ:COST) ranking #5 on the list, the company deserves a closer look.
Jim Cramer explained in a recent broadcast that if companies would acknowledge the changed circumstances, everything would be “much easier” for them and also for investors.
“At this point in the reporting season, there is so much information and misinformation floating around that it is very easy to be misled,” Cramer said.
Cramer believes that companies “omit” important information, which can lead investors to make “wrong decisions.”
As an example, Cramer cited food and beverage companies not discussing the impact of weight-loss drugs on their finances.
Cramer said GLP-1 drugs are extremely “powerful” and reduce cravings for snacks and alcohol. This, Cramer said, directly affects the beverage and snack manufacturers. However, Cramer said these companies intentionally do not mention the effects of these drugs.
“I wonder how long they can keep up this fiction. It would be better if they just admitted that it is a problem rather than just ignoring it.”
Cramer was also angry that consumer goods companies are not admitting that high prices are a strain on their finances. He said hotels and entertainment companies have raised their prices in the past but are now unwilling to lower them despite price pressures.
Cramer also called the claim that huge AI investments would not bring tangible results to companies “absurd.”
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Costco Wholesale Corporation (NASDAQ:COST)
Number of hedge fund investors: 65
Jim Cramer once again hit the “buy, buy, buy” button on Costco in his recent show, praising the company’s “incredible deals.”
Costco recently reported a 7.4% increase in monthly net sales for June to $24.48 billion, up from $22.78 billion a year ago. Analysts believe that the recent increase in membership fees will not negatively impact Costco Wholesale Corporation (NASDAQ:COST) given its loyal customer base. Costco has over 74.5 million paying members and a 90.5% renewal rate. In May, the company reported its fiscal third quarter results. Despite the huge inflation, the company’s results were optimistic as it beat estimates in both revenue and earnings per share. Costco Wholesale Corporation (NASDAQ:COST) saw comparable customer traffic increase by 6.1% while maintaining a remarkably low shrink rate of under 0.2%, one-tenth of the industry average. The great value offered by Costco Wholesale Corporation (NASDAQ:COST) is causing customers to flock to purchase its Executive Membership, which costs nearly twice as much as a regular membership. The company had 34.5 million paid executive memberships, an increase of 661,000 from the previous quarter. Costco Wholesale Corporation (NASDAQ:COST) executive board members now represent over 46% of paid members and 73.1% of global revenue.
As consumers continue to look for better prices and inflation is far from over, Costco is expected to continue to grow. Costco Wholesale Corporation (NASDAQ:COST) is also a strong dividend payer, with consistent dividend increases for about two decades.
ClearBridge Sustainability Leaders Strategy made the following comment on Costco Wholesale Corporation (NASDAQ:COST) in its Investor letter Q2 2024:
“Consumer goods investments also performed excellently in the quarter, such as Costco Wholesale Corporation (NASDAQ:COST), which continues to perform well and deliver better-than-expected earnings, helped by strong traffic that resulted in better cost leverage. Customers also appeared to place more emphasis on discretionary purchases.”
Overall, Costco Wholesale Corporation (NASDAQ:COST) ranks 5th on Insider Monkey’s list of the titled Jim Cramer’s latest calls: Top 10 stocks. While we recognize the potential of Costco Wholesale Corporation (NASDAQ:COST), we believe AI stocks promise higher returns and do so in a shorter time frame. If you’re looking for an AI stock that’s more promising than COST but trades at less than 5 times earnings, read our report on the cheapest AI stock.
READ MORE: $30 trillion opportunity: The 15 best humanoid robot stocks to buy, according to Morgan Stanley And According to Jim Cramer, NVIDIA has “become a wasteland”.
Disclosure: None. This article was originally published on Insider Monkey.
