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Can Both Costco & Wal-Mart Be Good Investments?

Is Costco Finally Running Out Of Steam?

Summary

  • Weakening foreign currencies and lower oil prices have been dragging down Costco’s comps but I remain confident about the underlying strength of Costco’s business.
  • Costco has boundless opportunities to grow outside North America.
  • Still, Costco has not reached a ‘full’ penetration level in the U.S.

By S. Hasan Abid


You might be seeing more Costco shopping carts in America's heartland soon.

Costco's (NASDAQ:COST) top-line growth in Q3 fiscal 2016 did not exactly knock investors' socks off but the company's growth story remains intact. In the last 5 years, Costco has expanded its retail footprint immensely and after adding 7 new warehouses in Q3, Costco now operates 705 warehouses globally. Bears, still, are quick to point out that Costco, despite having a robust business model, is a mature business whose growth opportunities in the U.S., its main market, are bound to dwindle drastically sooner rather than later. The goal of this article is to assess the validity of claims like these and discuss Costco's growth prospects... CONTINUE READING



Wal-Mart: A Dividend Aristocrat That Won't Die

Summary

  • Wal-Mart has a solid dividend history. In the last 25 years, it has consistently increased dividends.
  • The company can easily support a 10-15% annual dividend growth rate for at least a decade.
  • Wal-Mart's dividend is still far from entering into unsustainable territory.

By S. Hasan Abid

Last time, we discussed the merits of investing in the world's largest retailer, Wal-Mart (NYSE:WMT). We also talked about how WMT is evolving with time to compete effectively in a future world where online shopping is likely to be a norm rather than an exception. According to Statista, by 2019 there will be 224 million online shoppers in the U.S. As discussed previously, this isn't something that should worry WMT's shareholders excessively, because the company is quickly developing a stronger omnichannel presence and has a fantastic distribution and logistics network, which can help it expand its competitive advantage in the retail space.

As an investment proposition, one of the crucial things that sets WMT apart from many other retailers, including the likes of Costco (NASDAQ:COST), is its status as a "Dividend Aristocrat". We've seen the company raise dividends in each of the last 25 years - an amazing feat. But as a shareholder, should you expect this to continue? How sustainable are WMT's dividends... CONTINUE READING

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