3 Reasons to Buy Costco

In the video below, Fool analysts Isaac Pino and Austin Smith take a look at the bull case for Costco Wholesale .

Costco offers a terrific value opportunity for customers, and that translates into success. It does not spend on "frivolous" expenditures that other retailers do, such as advertising, marketing, store signs.

That no-frills model allows Costco to deliver goods almost at cost to its members, then make money from membership fees. Those fees make up only 2% of its revenue, but 77% of its operating income, Isaac says.

Costco also has a great combination of pricing power and buying power. In Nov. 2011, Costco raised membership fees by 10%. A year later, there was no appreciable loss of membership, Issac says. That means it can pass along the costs of goods to members.

And while it may be a smaller company than Walmart , Costco has great buying power because it does not stock as wide a variety of goods.

Costco also has great intangibles -- fantastic service and well-trained management, often groomed from within the company.

Costco Wholesale's low prices haven't just benefited customers -- shareholders have walloped the market, returning 11,000% over the past two decades. However, with prices near all-time highs, is the ride over for Costco investors? To answer that and more, we've compiled a premium research report with in-depth analysis on Costco. Simply click here now to gain instant access to this valuable investor's resource.

The relevant video segment can be found between 2:52 and 6:28.

The article 3 Reasons to Buy Costco originally appeared on Fool.com.

Blake Bos has no position in any stocks mentioned. Isaac Pino, CPA has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and Costco Wholesale. The Motley Fool owns shares of Amazon.com and Costco Wholesale. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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