The downturn in the stock market indexes shows Wall Street has been dumping shares in a broad range of sectors. Meanwhile, top money managers have scooped up shares in big box retailer Costco.
In the latest list of new buys by the best mutual funds, leading institutional investors loaded up roughly $150 million worth of shares in Costco stock into their shopping carts.
Demand for shares has pushed Costco's relative strength line to a new 52-week high as the stock sets up a potential new breakout. The performance of Costco stock has also secured it a spot on the IBD Breakout Stocks Index, along with grocery retailer Kroger.
With a 93 Composite Rating, Costco tops its large discount retailer industry group and earns a spot on the IBD 50. That score far outpaces the Composite Ratings for fellow large retailers Target (73) and Walmart (75).
The group ranks a middling No. 82 among the 197 groups IBD tracks.
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Costco Beats Estimates, Posts Second Quarter Of Acceleration
With headquarters in Washington state, Costco operates 828 warehouses, including 572 in the U.S. and Puerto Rico, 105 in Canada, 40 in Mexico. Also included in the total are 30 warehouses in Japan, 29 in the United Kingdom, 16 in Korea, 14 in Taiwan, 13 in Australia, four in Spain, two each in France and China, and one in Iceland.
Costco also operates e-commerce sites in the U.S., Canada, the United Kingdom, Mexico, Korea, Taiwan, Japan, and Australia.
On March 3, the company reported second quarter results for fiscal 2022, ended Feb. 13. Earnings growth beat analyst estimates, coming in at $2.92 per share, a 15% increase over the prior-year quarter. That marked a second quarter of EPS acceleration.
Sales growth remains solid and steady, ranging from 15% to 21% over the last six quarters.
In addition to making the latest list of new buys by the best mutual funds to show strong institutional demand, 257 funds with an A+ rating from IBD own shares in Costco stock. Plus, the company has seen eight quarters of rising fund ownership.
Costco Stock Sets As Market Sells Off
When the general market falls into a correction, it takes most stocks down with it. But Costco stock is trying to buck the current market downtrend.
Costco is working on a second-stage cup shape showing a 571.59 buy point. The stock has retaken its 50-day moving average and retested it again today, closing above the benchmark.
While it's risky to buy stocks in current market conditions, Costco stock is outperforming the S&P 500 as its RS line continues to rise. Fellow IBD Breakout Stocks Index member Kroger is also showing market-leading strength, although it has pulled back this week, but is trying to come off its lows.
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The IBD Breakout Opportunities ETF from Innovator Capital Management tracks the IBD Breakout Stocks Index. As with other index ETFs, this fund allows you to essentially invest in the entire index in addition to or rather than buying the individual stocks. Learn more here about the ETF and Innovator funds.
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
