Latest news with #warehouseclubs
Yahoo
2 days ago
- Business
- Yahoo
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. Copyright: stocking / 123RF Stock Photo 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. READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock. Disclosure: None.
Yahoo
05-08-2025
- Business
- Yahoo
Big-Box Battle: Should You Stock Up on Costco or BJ's?
Key Points Warehouse clubs like Costco and BJ's are thriving as shoppers seek value in a shaky economy. Costco offers global scale and steady performance, while BJ's is gaining ground with digital growth and expansion. Investors must weigh BJ's growth potential against Costco's proven consistency, or decide to put both in their portfolio's shopping cart. 10 stocks we like better than Costco Wholesale › In today's tightening economy, value (or, at least, the perception of value) reigns supreme among average shoppers. With inflation concerns becoming stronger and whispers of a recession lingering, warehouse clubs are not just thriving, they're stacking profits higher than a pallet of paper towels. Whether you're a family stretching every dollar or an investor looking for upside in retail stocks, Costco (NASDAQ: COST) and BJ's Wholesale Club (NYSE: BJ) are both compelling plays. But they're not created equal. One is a proven juggernaut, while the other is a nimble challenger with momentum. The recession playbook: value and volume Warehouse clubs thrive when consumers start counting pennies. Though it may seem counterintuitive to spend more money upfront, shoppers turn to warehouse clubs in tough times because bulk deals offer a sense of value and stability. When budgets get tight, consumers swap avocado toast for 10-pound bags of rice. Shoppers make the Costco versus BJ's decision based on different priorities. Some gravitate to Costco for its premium private-label goods (like Kirkland), broad international reach, and reputation for quality and consistency. Others prefer BJ's for its lower membership fees, frequent promotions, and the convenience of accepting manufacturer coupons. But when it comes to choosing between them as investments, the decision is more nuanced. Costco, the veteran performer still hitting its marks Costco is the undisputed heavyweight in the warehouse space, with over 900 stores globally — 50% more than it's closest competitor, Sam's Club — and a reputation for low turnover, high renewal rates, and fanatically loyal members. It's not just anecdotal love, either, as the numbers back it up. In May, comparable store sales rose 4.3%. But the real highlight was online sales, which surged 11.6%. That may not sound earth-shattering in an era of two-day shipping, but Costco has traditionally lagged in e-commerce. Seeing double-digit digital growth is a sign that the company isn't resting on its brick-and-mortar laurels. Looking ahead, analysts expect 8% same-store sales growth for Q3, driven largely by stores outside the U.S. The company is also experiencing meaningful growth in the Asia market, with 37 stores in Japan, 20 in Korea, 14 in Taiwan, 7 in China, and more planned for the future. That international tailwind speaks to Costco's global brand power and ongoing expansion opportunities, traits that give the stock its status as a good steady, long-term bet. BJ's, the 'little guy' that's growing fast Then there's BJ's, Costco's smaller rival based mainly on the East Coast. It's gaining ground. While it operates only about a quarter of the clubs Costco does, it's growing faster in both store count and digital capabilities. Membership income is up 8%, a promising sign for a company whose long-term health depends on keeping members engaged and renewing year after year. Perhaps more impressive is BJ's digital progress. Online-influenced sales, like click-and-collect and in-app deals, jumped 35% in Q1. That's not just a flashy stat. It's an indicator that BJ's understands where the modern shopper is headed. While physical traffic still matters, digital channels increasingly influence what, when, and how customers buy. For a company playing catch-up, that kind of digital acceleration could unlock a new tier of growth. But let's not overlook the importance of store expansion, too. While BJ's is opening a similar number of locations a year to Costco, those additions represent a much larger percentage of its total store base, making every new club more impactful to the top line. A faster growth in sales at existing stores, combined with an aggressive store expansion plan creates a powerful growth cocktail, if the company can maintain it. The investor's dilemma: predictability or potential? So, how should investors choose? Both Costco and BJ's benefit from economic headwinds, but they play different roles in an investment portfolio. If you want the blue-chip, time-tested choice, it's Costco. You're paying a premium valuation, but you're getting a strong financial foundation, robust international growth, and one of the stickiest membership models in retail with a 93% renewal rate. . The stock is less likely to wow you with sudden upside, but it's also less likely to surprise you with volatility. BJ's, on the other hand, is cheaper, and not just in the aisles. The stock trades at a discount to Costco by nearly every metric. Can it keep growing memberships while maintaining quality service? Will renewal rates rise as its club footprint expands? Can it hold margins while investing in digital? Those are real risks. But for investors willing to bet on BJs, the upside could be significant. If you're looking for a reliable anchor in turbulent markets, Costco is tough to beat. But if you believe BJ's can continue narrowing the gap, it might be worth giving the underdog a shot. Either way, you won't just be shopping, you'll be stock-piling. Do the experts think Costco Wholesale is a buy right now? The Motley Fool's expert analyst team, drawing on years of investing experience and deep analysis of thousands of stocks, leverages our proprietary Moneyball AI investing database to uncover top opportunities. They've just revealed their to buy now — did Costco Wholesale make the list? When our Stock Advisor analyst team has a stock recommendation, it can pay to listen. After all, Stock Advisor's total average return is up 1,019% vs. just 178% for the S&P — that is beating the market by 841.12%!* Imagine if you were a Stock Advisor member when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $624,823!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,064,820!* The 10 stocks that made the cut could produce monster returns in the coming years. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of August 4, 2025 Philippa Main has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy. Big-Box Battle: Should You Stock Up on Costco or BJ's? was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
