What Are Costco's Biggest Risks?
Jan 20th 2013 11:54AM
Updated Jan 21st 2013 6:50AM
In the following video, Fool analysts Isaac Pino and Blake Bos look at some of the biggest risks facing Costco Wholesale .
One of Costco's biggest opportunities is international expansion, but it's also one of its biggest risks, Blake says. Plenty of retailers have stumbled when expanding outside the U.S., including Home Depot , which had to pull back from its expansion into China, Isaac adds.
Costco could face similar problems entering into markets where the culture is very different. Membership renewal rates have been slightly lower internationally, so it's something investors must watch.
Valuation is another risk. Costco sells at a premium, and retailers hit hurdles along the way. If it were to miss on earnings, it could take a hit, Isaac says.
Domestically, Costco is running out of opportunities to grow, Isaac says. At this valuation, he adds, that makes a runway for international growth even more important to Costco and its investors.
Costco's low prices haven't just benefited customers -- investors have seen their shares wallop the market, returning 11,000% over the past two decades. However, with prices near all-time highs, is the ride over for Costco investors? To answer that and more, we've compiled a premium research report with in-depth analysis on Costco. Simply click here now to gain instant access to this valuable investor resource.
The article What Are Costco's Biggest Risks? originally appeared on Fool.com.Blake Bos has long June 2013 $14 Puts on Best Buy. Isaac Pino, CPA, has no position in any stocks mentioned. The Motley Fool recommends Costco Wholesale and Home Depot and owns shares of Costco Wholesale. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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