The retail space has come under pressure this year, and many are betting that brick-and-mortar retail in particular is nearing extinction -- at the hands of Amazon.com, Inc. (AMZN). I don't believe that is the case, and in fact suspect the industry is oversold.
Costco Wholesale Corporation
While getting in ahead of fundamental evidence and execution is still a high-risk position, I wanted to talk today about two names related to the space I happen to love right now.
(Prices and data are from the original InvestorPlace story published on April 20, 2017. Click on ticker-symbol links in each slide for current prices and more.)
The first is Costco Wholesale Corporation (COST), a membership-only warehouse club with operations around the world. It's a leader in its market -- when he was alive, Sam Walton admired and envied the Costco model and tried to best his duplicate it with Sam's Club.
Ironically, Costco's famous execution has come up short of late, as the company has missed Wall Street's estimates in back-to-back quarters. However, the shares have held up well and are only off fractionally.
This company is in a league of its own, and it recently posted market sales metrics that bode very well for quarterly results. March comparable-store sales were impressive, with revenue improving 7% in the U.S., 3% in Canada and 4% internationally.
I expect execution will get better down the road and believe COST stock is a good investment for the long term.
The second stock I want to talk about is, of course, Amazon, which is an online retail company that has recently expressed interest in brick and mortar.
Amazon is the bold and the brave, and never worried about the bottom line as it built its empire. Now that the empire is built, Jeff Bezos may be looking to pick up the pieces of the retail revolution AMZN has led.
Rumors have been swirling that Amazon is on the hunt to purchase brick-and-mortar companies. News surfaced that it was eyeing Whole Foods Market, Inc. (WFM), and now the New York Post is reporting that AMZN has is interested in BJ's Wholesale Club, which is up for sale after scrapping initial plans to go public.
I like that Amazon has always been able to shake off failure, including its attempt to break into the smartphone business and even more recently its $500 million purchase of Diapers.com and Soap.com. I suspect it will push drone delivery through soon and make an even bigger splash in its additional endeavors.
It's true that the stock can be volatile from time to time, but I view AMZN stock as another long-term buy-and-hold in the current environment.
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