Costco (NASDAQ:COST) Indicating Positive Sign of a Bullish Trend
Costco wants your loyalty
To some extent, Costco's sales will ebb and flow along with the economy. That's natural for a retailer. But what won't change over the next three years is the company's focus on keeping its customers happy, because that supports an important income stream. And you can keep tabs on that by watching its membership renewal rates.
Costco's Growth
Costco's growth opportunities reside in increasing membership by incremental amounts and opening new stores. Comparable-sales growth is strained right now due to inflation, but the company typically demonstrates mid- to high-single digit percentage comparable sales growth. Membership increased 7.9% year over year in the fiscal fourth quarter (ended Sept. 3), and membership fee income increased as a percentage of sales from 1.88% to 1.95%. It will also likely raise its annual membership fee, which stands at $60 for a basic membership, sometime soon. That will lead to an increase on the bottom line.
If you own this stock, or are considering buying it, making sure that Costco generates consistently high renewals may actually be more important than monitoring its product sales.
Price Momentum
COST is trading near the top of its 52-week range and above its 200-day simple moving average.
What does this mean?
Investors have been pushing the share price higher, and the stock still appears to have upward momentum. This is a positive sign for the stock's future value.
