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Tim Brown: Find a Stock Bargain in Costco

The big-box retailer remains a customer destination even in tough times.
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When I search for stocks, I look for companies that are resilient. The kind that won't get too beaten up when the market goes south and which can tough it out when needed, the kind that has the tools to grow when times are tough.

In football, that quality is shown when players play through the pain of an injury. Terrell Owens did it when he was playing for the Eagles in the Super Bowl. He is a game-changer, and he fought through a serious injury to make a positive impact for his team, although the Eagles ultimately lost.

Last Sunday, Cowboys quarterback Tony Romo broke the pinkie finger on his throwing hand, which is extremely important to his ability to pass. He hurt it in overtime in last week's loss against the Cardinals. After a phone call from Brett Favre, who is known for his consecutive starting streak and playing through injuries, Romo decided he may try and tough it out if he is physically able to play.

While this not a broken leg like Owens' injury, Romo is showing that he will do what it takes and not let an injury knock him out of the game. Now, the decision is ultimately up to coach Wade Phillips. Backup Brad Johnson may end up starting Sunday, but either way, Romo's resilience is impressive.

A company that I believe is primed to weather a difficult market is



, the membership warehouse. You know, the place where you can buy tons of your favorite snacks in bulk. It has a lot more than just that. The place sells candy, tobacco, alcoholic and non-alcoholic drinks, computer and video equipment, cleaning supplies, furniture, dinner foods, apparel and much more. People flock to these stores, and every time I shop there, the lines at the checkout are always nuts.

Even during an economic downturn, people need food, beverages and other basic supplies. Plus, they get a discount for buying in bulk at Costco. And, when I look at the data for this company, I like what I see.

Recently the stock was near $57.50 in midday trading. It has lost 13.14% of its value in the last year and has rebounded a bit from its 52-week low of $51.00, which it hit last Friday. The company has revenue of $72 billion and $3.65 billion in cash on hand, which is important in difficult market conditions.

Looking at its forward price-to-earnings ratio (16.38), the company is not quite at the level of being fully undervalued, but it is at the lower end. I consider anything below 15 to be undervalued by Wall Street, and Costco's P/E approaches that. Costco has a return on equity of 14.46% and solid institutional support at 84.80%.

Lastly it has a price/earnings-to-growth (PEG) ratio of 1.39 and a beta of 0.51, which shows me it's not an overly volatile stock. Picking this company will put me in prime position for a win.

Keep moving the chains!

At the time of publication, Brown had no positions in stocks mentioned, although positions may change at any time.

Tim Brown played 16 seasons in the NFL, where he made nine Pro Bowls. After a brief stint with the Tampa Bay Buccaneers in 2004, Brown retired as an Oakland Raider. He was a Heisman Trophy winner in college for Notre Dame.