This retail stock is a good pick no matter what the economy does

on Oct 8, 2022
  • Gina Sanchez likes Costco as it benefits from inflation.
  • The retailer is well positioned for a recession as well.
  • Costco shares have lost nearly 25% in two months.

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Costco Wholesale Corporation (NASDAQ: COST) has lost nearly 25% over the past two months, which, as per Gina Sanchez (Lido Advisors), is a classic buy the dip moment.

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Costco is a great pick for inflation

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In August, inflation was up 0.1% in the United States, but that’s apparently not a bad thing for the big box retailer. Explaining why, she said on CNBC’s “The Exchange”:

The great thing about Costco is that they manage to benefit from inflation going up because they still do increase their prices; they just keep them below the competition making them the go-to buy.

Last month, the chain of membership-only retail stores reported better-than-expected results for its fiscal fourth quarter. Its core gross margin, though, was down 26 basis points on a year-over-year basis.

Wall Street currently has a consensus “overweight” rating on shares of Costco.

Costco is just as good for a recession

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In September, the U.S. Federal Reserve agreed that the chances of a “soft landing” were rather slim. Interestingly, Sanchez says the Issaquah-headquartered multinational well positioned to weather a recession as well.

Costco is where you go when you want to buy things at a relatively cheaper price. It sells cheap stuff and most importantly, cheap gas or at least cheaper gas. So, they capture that demand as people’s wallets get crimped.

Costco shares were in focus this week after the Nasdaq-listed firm said its sales noted an annualised growth of just over 10% in September.

Another retail stock she likes is Lowe’s Companies Inc (NYSE: LOW) down more than 20% for the year at the time of writing.


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