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Stephanie Link's Can Kickers: Notes on Costco

NEW YORK ( TheStreet) -- Retail sales for June were largely disappointing following several months of better than expected results tied to warmer than usual weather. We sold out of Costco (COST - Get Report) last week - having run 14% from its recent lows we didn't like the risk/reward. But it's a name that continues to be on our radar screen given its quality brand, dominance in the club warehouse market, strong returns and steady recurring revenues which is driven by its membership fee business.

The company disappointed on the same store sales line coming in at the low end of its guide at 3% gain ad 4% consensus. But underlying fundamentals remain strong with core US comps at 3% (and a nice 11% 2 year stacked basis), International comps up 8% (an impressive 17% 2 year stacked) and traffic remained solid at 3% despite the Independence Day shift.

In the meantime, we will stick with our TJX (TJX - Get Report) position which continues to mail it in with 7% June comps, higher earnings guidance and a strong inventory position. Jim and I debate whether to keep taking gains in this one, but with strong momentum and secular growth in the off priced segment - we will continue to enjoy the ride. Plus at 15x forward estimates the stock trades below its earnings growth rate of 16-18%. As a sidenote, please check out our latest addition in the retail segment Nike (NKE) and why we continue to add to Caremart (CVS - Get Report) - which is now posted on the site.

To see our latest thoughts on these and other stocks please visit Action Alerts Plus and Real Money.
Co-Portfolio Manager of Jim Cramer's Charitable Trust Portfolio, Action Alerts PLUS Portfolio. This includes developing a macro outlook, stock selection, and daily written analysis in managing the fund and for subscribers to follow and participate. It also includes a weekly summary report of the strategy, positions and ranking of each stock in the fund. Promote the product through weekly videos independently and with Jim Cramer on the website. Strategy responsibility includes overseeing all content, talent, supervision and developement of the premium website services. Appear regularly on Maria Bartiromo's "The Closing Bell", Larry Kudlow's "The Kudlow Report" and CNN affiliate The Wall Street Shuffle.

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