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PriceSmart, Inc. (PSMT): A Bull Case Theory
We came across a bullish thesis on PriceSmart, Inc. on Countervail Capital's Substack by Johann Colloredo-Mansfeld. In this article, we will summarize the bulls' thesis on PSMT. PriceSmart, Inc.'s share was trading at $111.29 as of August 7th. PSMT's trailing P/E was 23.43 according to Yahoo Finance.
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PriceSmart, Inc. (PSMT), a U.S.-based operator of 54 membership warehouse clubs across Latin America and the Caribbean, has been financially resilient but largely ignored by markets. Despite consistent 7.3% revenue CAGR since FY 2020, margin expansion, and a strong balance sheet with no debt, the stock has remained flat for a decade, sharply underperforming U.S. peers like Costco and BJ's.
PSMT's operations resemble a long-EM, short-dollar carry trade: it collects revenues in local currencies but sources and finances in U.S. dollars, making FX a primary driver of performance. Empirical analysis shows that a 1% local currency appreciation boosts annual revenue growth by ~3% and EBITDA margins by 0.57%. Valuation multiples tend to rise indirectly through these fundamentals during weak-dollar regimes. In such scenarios, simulations suggest PSMT equity could return over 5x within three years, albeit with elevated tail risk.
In contrast, under strong-dollar regimes, outcomes are stable but muted, with capital preservation and a 1.5x median return. Currently, PSMT trades at steep discounts—79% on TEV/EBITDA and 68% on TEV/Sales—despite similar returns on capital and higher margins versus peers. It yields 1.2% on dividends and 1.8% on free cash flow, offering positive carry while acting as a leveraged hedge on USD weakness. With improving fundamentals, robust FX-driven upside optionality, and current valuation misalignment amid a weakening dollar backdrop, PSMT equity presents a rare opportunity: an attractively priced, positive-carry instrument offering asymmetric upside and capital protection—an underappreciated bet on dollar depreciation embedded in a fundamentally solid business.
Previously, we covered a bullish thesis on PriceSmart, Inc. (PSMT) by Charly AI in April 2025, which highlighted the company's strong financials, regional expansion, and undervaluation. The company's stock price has appreciated approximately 9% since our coverage. This is because the thesis began to play out. Johann Colloredo-Mansfeld shares an identical thesis but emphasizes FX-driven upside optionality.
PriceSmart, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 20 hedge fund portfolios held PSMT at the end of the first quarter which was 22 in the previous quarter. While we acknowledge the potential of PSMT as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
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Disclosure: None.
