COSTCO and the RICH

Those of us who invest as a profession continue to worry about the impact of weakening consumer sentiment caused by the sub-prime debacle -- regardless of what the market is and is not doing in the short term. We are especially weary of the retail sectors where all of this plays out big time. But not all retailers are the same, and not all are affected equally by the credit crunch. And, here is where bold investors find winners.

Costco is one such winner. They just announced an almost 5% increase in net income for their third quarter, and their share price is now at an all-time high. Indeed, Costco is one of the few good news stories in retail in the last months. It is certainly doing much better than such competitors as Sam's Club, BJ's, and the like.

The principal reason it is doing so well and doing so much better than many other retail companies is that it serves primarily rich consumers. The store sells high-end products from wine to diamonds to plasma TVs, in addition to more basic but excellent warehouse wares, and its customers are not directly, or mostly even indirectly, affected by credit concerns in the economy. Costco has certainly set itself apart from similar retail operations and it shares immunity with other high-end retailers. It is a strong stock to own at this time. It is a strong stock to own at almost any time.

Read the Wall Street Journal article on its third quarter results.