13% year to date, this company’s business model is a testament to the economic downturn.

Of S&P 500 Between April 1, 2020 and the end of 2021, the stock was up 93 percent, but since the beginning of the new year, stocks have been in the water. The data has fallen 20% year-on-year due to rising Federal Reserve interest rates to boost inflation. As a result, many investors are beginning to fear that a strong monetary policy will drag them down.

As financial markets may fluctuate in the future, regardless of the macroeconomic environment, investors need to turn to successful businesses. Costco Wholesale (Price 1.78%) It’s just such a company. The membership-only retailer has surprisingly rewarded long-term shareholders with a gross revenue of 579% over the past decade.

As uncertainty continues to weigh on the global economy, let’s explore why Costa is a wise investment.

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Costco’s business model is consistent.

Membership’s only retailer, Titan, has seen a strong run in the third quarter of fiscal year 2022. Sales rose 16.3 percent year-on-year to $ 51.6 billion, and revenue per share rose 10.5 percent to $ 3.04. The operating margin decreased from 28 base points to 3.5%, and the net profit margin decreased from 13 base points to 2.6%. However, the membership fee has increased from 9.2 percent to $ 984 million, showing the retailer’s ability to nurture and attract new customers to its warehouses.

Membership fees accounted for only 1.9% of the company’s gross margin in the third quarter, accounting for 73 percent of gross margins. Costco’s membership model determines the success of the company. Based on a 92.3% renewal rate in the United States and Canada, it currently costs only $ 60 a year for a regular Gold Star membership, and it does not hurt to attract new customers compared to most enrolled businesses.

The company’s Blue-Ribbon customer retention makes it a very sustainable business, allowing investors to easily predict its implementation over time. Costco seems to be free of macro winds, coupled with low prices that could attract more customers in an unstable economy.

For the full year, Wall Street analysts said the company’s high line was up 15.1% year-on-year to $ 225.5 billion and its share price rose from 17.6% to $ 13.04. These are strong growth rates for a complex economy, but better yet, the stock has rebounded 13.1% to date, moving its price-to-earnings ratio of 38.8 to an average of 36.2 to five-year.

Expect more success for future Costa

I have no doubt in my mind that Costa will continue to have a healthy performance in the years to come. Given the current economic climate, high inflation, rising interest rates, and the war in Ukraine, Costa must be a threat to investors who want to use a business model that does not guarantee the company’s economic collapse.

Thus, I feel comfortable with the stock at the current review levels; But sensible investors have to wait until the price drops below the five-year average. At that time, it will be “time to go” to buy the world’s leading retail giant.