Retail stocks tend to get a bad rap. It’s easy to see why. Profit margins tend to be low, growth can be slow, and supply chain issues over the past year have led to one shortage after another.
But some companies have a great reputation, a moderate profit margin, and are able to consistently raise their income year over year. Any retailer that can do so indefinitely is a great one to own for the long haul.
In this space, the champion is Costco (COST). The company limits its profit margins on any items sold, will cut off a supplier if they find out another retailer gets a better price, and the company makes a high profit margin on its annual membership subscriptions.
With hordes of satisfied customers, it’s easy to see why analysts continue to like the stock, even near all-time highs. With the company likely to raise membership fees in 2022, investors will likely keep being rewarded with a growing dividend payment and rising share price over time.
Action to take: Share are hardly cheap by any measure, but the company’s consistent growth and profit margins make it a stock worth owning for the long haul. Shares currently yield just under 0.6 percent, but that dividend has been grown over time.
For traders, the July $600 calls have the potential to move in-the-money. Last going for about $26, the option could deliver high double-digit returns in the next few months on a continued rally in shares.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.