A good article for going long Costco.

Costco stock fell following Amazon’s Whole Foods acquisition.

Costco will be fine. It has good management and a loyal customer base. 

Also, it is unlikely that Amazon will instantly crush food sector after buying Whole Foods.

Even the best acquisition take some time to work out, in the mean time, Costco will be fine. Also, Costco may make it’s own acquisition like Walmart. I think Costco could buy boxed.com, the online bulk seller, and increase its online presence.

Plus, Costco still can grow more by opening more stores.

One downside that I see is that Amazon becomes instantly so good that it will crush Costco. This is unlikely to occur because Amazon and Whole Foods are not strong in bulk sales.

Another risk is that Costco cannot control its costs or quality. Again, not likely to happen given the experienced management team.

Hence, overall, Costco is good buy right now. I plan to buy more shares soon.

PS

I also own Amazon. I think Whole Foods acquisition is a smart move. I believe that the Whole Foods acquisition will impact Target and other more upscale markets than bulk sellers.

Advertisements