We're Buying More Shares of This Holding as Report Confirms Essential Thesis

Symbol	Transaction Type	# Shares Traded	Recent Price $	Shares Owned After Trade	% Portfolio
COST	Buy	10	928	228	3.8

After you receive this Alert, we will buy 10 shares of Costco (COST) at or near $928. Following the trade, COST shares will account for roughly 3.8% of the Pro Portfolio.

When the stock market opens this morning, we will step further into shares of Costco following last night’s September comp sales report, which in many ways confirmed the company continues to win consumer wallet share. That has been an essential part of our thesis behind Costco, with the other being its expanding and sticky membership fee revenue stream.

As we make this move, we are also reiterating our One rating on the shares, the rationale for which we laid out in this week’s Stocks & Markets podcast. If you missed that, you can find the podcast and the transcript here.

About Those September Numbers…

Last night, Costco shared its sales reached $26.58 billion for the five weeks ending October 5, an 8% rise year-over-year, with 914 open warehouse locations exiting the period.

Reported total company comp sales were up 5.7% year over year, but we prefer looking at the data on an adjusted basis that excludes the impact of gas sales and foreign exchange to get a better read on consumer activity. Stripping those out, total company comp sales inceased 6.0% for the period, with the U.S. up 5.0%, Canada 9.3% and Other International 7.5%. Digitally enabled sales, which reflect sales initiated through a digital device but fulfilled either through the warehouse or a distribution center, as well as Costco-Travel sales, increased 26.1% during the month.

In a vacuum, those are some very nice figures, but when we examine them against the tough year-over-year comparisons they are staring down, they are even more compelling. For the same five-week period that ended October 6, 2024, Costco’s total company comp sales were 6.7% and 8.9% on an adjusted basis, with the U.S. up 9.3%.

We’ll continue to keep those tough year-over-year comparisons in mind as we examine Costco’s October, November, and December monthly sales reports and comp sales figures. As those figures are had, we’ll revisit our price target as needed, sizing it up against retail and consumer spending-related data.

If history holds, in the next few weeks, Costco should be announcing its next quarterly dividend, which, like the two already paid this year, should be $1.30 per share. Today’s modest nibble will qualify us to capture even more of that payment to shareholders.

Making this move will bring our cash level down a tad further. Given some of the recent moves we’ve made by starting positions in Welltower (WELL) and Arista Networks (ANET) , plus one or two others we are contemplating, and a similar figure on our shopping list, we have room to make some of those moves. Past a certain point, however, we may need to harvest some gains to fund those additional moves as we strive to position the Pro Portfolio for the coming quarters.

As we make today’s move, we will reset our panic point to $880 from $925, but plan on moving it higher as the shares rebound.

Because we are sharing this trade before the market opens, we will confirm the trade price for this move once it is executed in the Comments section below.

More Pro Portfolio:

(Please note that we are looking to execute these trades at or near the share price mentioned above. Once the trade is completed, subscribers can see the trade's executed price here. Be sure to toggle the chart to sort by Purchase Date.)

At the time of publication, TheStreet Pro Portfolio was long COST, WELL and ANET.