Unlock: Costco (COST) – View from Strong Channel Checks Pays Off Handsomely

It pays to do fundamental research. There were two pieces bullish notes presented to clients on November 16 and 28 with stock knocking on the door of $154 technical resistance. Major winner for clients today. To learn more about our approach and how you can become a successful trader, sign up for 2 week trial and test drive live chat room with some of the best traders: SUBSCRIBE

November 16, 2016

Costco (COST) – Trying to clear $152.50 resistance here with buyers of 1,100 Jan’17 155-strike calls for $3.55 offer. Approx $380,000 bullish bet. If you want to buy a retailer, this is your play.

Costco has always been a better operator than most other discount big box retailers. Many key drivers of growth here that could propel the stock specially in environment of this reflation trade with Trump presidency.

Costco’s pricing authority on key items (over 3,700 SKU’s), a leading merchandise offering, rising adoption of the new Costco co-branded Visa card which now has more than 12 million Amex card holders, and a rapidly growing online platform, which now does over $3.5 billion in annual sales. With decent macro growth environment, all this should result in a strong Holiday for Costco. Looking forward to 2017, Costco’s US same-store sales should accelerate back towards a healthier 3-4% range as Costco laps due to simple fact co-branded credit card transition issues (began in June 2016) are now addressed. Costco’s comps should also benefit from strong seasonal food and sundries sales (gift baskets and wine), better electronic sales led by UH and 4K TVs, small appliances that are now selling better online, and a strong apparel offering such as new brands like Canada Goose and Sorel both launched recently.

November 28, 2016