Costco Costs More Than $920 a Share. Here's Why I'd Still Buy One.
Key Points
Costco just posted another strong quarter, proving its all-weather appeal.
After 22 years of dividend hikes, Costco could pay a record one-time distribution later this year.
The stock's one-year beta of 0.01 shows it's marching to a different beat from the general market.
It's not just Costco's (NASDAQ: COST) packaged merchandise trading in large sizes. The leading warehouse club operator also has a bulk-size price. Costco closed at $922.77 on Friday. Don't let the large price dissuade you.
You would need to shell out more than $92,000 to buy a round lot of Costco, but don't let the steep potential cover charge dissuade you. Your broker may offer fractional shares, but even if that's not the case, a single share for a little more than $920 could set you up nicely for the years ahead.
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A real deal
Here's the deal. Costco stock may seem pricey, but it's actually trading 2% lower than it was a year ago. This is opportunity knocking, even if you're not a card-carrying member of the warehouse club chain. Costco is still growing.
Revenue has increased 10% over the past year, while the bottom line has risen even faster. Its latest quarterly update -- announced late last week -- was another earnings beat, even if you back out some coffer-padding tariff refunds.
Costco has traditionally been a low-beta stock, holding up well during market setbacks given its somewhat recession-resistant value proposition. Beyond the dividend that it has increased for 22 consecutive years, it should also announce a larger special distribution later this year.
Add it all up, and Costco is a quality stock worth owning. Your next $1,000 to invest can be put to work on buying 100 shares or more of a speculative stock trading in the single digits, but a single share of Costco could be the better investment.
Rick Munarriz has positions in Costco Wholesale. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.