HOW TO PLAY IT

Forbes - - ENTREPRENEURS - PAUL DESISTO Paul DeSisto is port­fo­lio man­ager at the New York City-based value man­ager M&R Cap­i­tal Man­age­ment.

few com­pa­nies em­power mom-and-pop busi­nesses as suc­cess­fully as seattle’s Costco Whole­sale. from cus­tom­ized busi­ness print­ing ser­vices to cash man­age­ment tools such as pay­ment and credit card pro­cess­ing of­fered via U.s. bank sub­sidiary elavon, the $129 bil­lion (rev­enue) mem­ber­ship club is a mas­ter at pro­vid­ing prod­ucts and ser­vices that free small busi­nesses to fo­cus on what they do best. at a re­cent price of $186, it is trad­ing at 22 times 2019 earn­ings, sig­nif­i­cantly lower than the 28 mul­ti­ple at which it has traded over the past five years. even more en­cour­ag­ing are an­a­lyst es­ti­mates, which have been ris­ing steadily, as have div­i­dends, which have in­creased by 12% over the past five years. Costco prac­ti­cally in­vented the idea of cul­ti­vat­ing an ecosys­tem of loyal cus­tomers. it re­mains one of the few re­tail­ers that have the strength and busi­ness model to suc­cess­fully com­pete with ama­zon.

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