"[Costco] by the very nature of its business model, consumers are going to flock there to help stretch their disposable spending dollars,” he said. “But let's remember too that Costco is a very different type of retailer.”
That’s because of its membership business model. Memberships provide about 70% of the company’s profit, Versace said.
“And when we look year-over-year, there are still very favorable comparisons for the number of warehouses,” he said.
“They continue to expand that footprint. That tells us that membership revenue is going to continue to grow, helping to insulate Costco from any downward pressure on consumer spending.”
Costco shares have slid 12% so far this year, outperforming the S&P 500, which has dropped 14%.
Turning to Nvidia, the company has settled Securities and Exchange Commission charges that it failed to properly disclose revenue growth from cryptocurrency mining in 2018.
Versace said he isn’t too worried about the issue.
“There's always a lot of conjecture over the size of Nvidia's exposure to the crypto market,” he said. “They've talked time and again about it being extremely small. So from an operational perspective this isn’t something we would be overly concerned about.”
Nvidia’s $5.5 million fine is no big deal Versace said.
“The reality is, it's going to show up as something akin to a footnote in a financial filing, and that's about it,” he said. “I really wouldn’t put any great amount of focus on this, because it's simply not going to drive the core business now or in the near future.”
Nvidia shares have slumped 37% so far this year, a fall worse than the Nasdaq Composite's 23% descent.