Investors Say Costco Is ‘Amazon Proof’ And This Is Why

Costco Is Amazon Proof
Photo Credit: Mike Mozard / Flickr

Costco stock is rising after a strong November led analysts to declare the company to be “Amazon-proof.”

Deutsche Bank’s Paul Trussell upgraded Costco’s rating from hold to buy and then raised his target from $152 to $200.

November same-store sales were flat at the company, beating estimates of a 0.9% decline. When gas and foreign exchange were excluded the company’s comparable sales across rose by 6%.

The “Amazon-Proof” tag given to the company is something Wal-Mart, Target, and other companies would love to obtain.

The company is continuing to attract customers by offering a membership model that can be incentivized to draw in customers to brick-and-mortar locations.

The American public is becoming accustomed to membership programs from Amazon Prime and Netflix, to one dollar shave clubs and fashion packages that arrives based on a membership fee.

Costco’s 44.6 million households is an enormous number, accounting for $785 million in sales in the fourth quarter.

The company incentivizes gasoline and food, which draws in customers to other sales.

Gasoline serves as a huge part of Costco’s business, with recent low gas prices driving down same-store sales while helping encourage new members to sign up.

Costco’s food court is now one of the largest pizza chains in the US.

Even with the recent E. coli outbreak, Costco continues to impress thanks to a new Visa credit card partnership, higher gas margins likely to occur in the future, and general growth.