A Great Customer Experience Can Make for a Great Company

At its core, every business exists to eliminate a pain point for a consumer. That could mean anything from offering an entirely new product, to offering something faster, cheaper, or otherwise better than competitors.

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  • For retail, companies largely compete on price. That’s allowed big-box stores to thrive, particularly as consumers are looking for one-stop shopping. But one retailer has fared even better than competitors thanks to a more unique business model offering great customer service.

    That company is Costco (COST), which charges customers a membership fee.

    In exchange, members get access to quantity discounts for a number of products, as well as services ranging from air conditioning units, to caskets, and more infamously, a $1.50 hot dog special at their food court.

    Since going public in 1985, Costco has been a massive winner for investors, and looks set to continue delivering great returns.

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  • For instance, earnings are up 19%, even as consumers have been scaling back buying physical goods and spending more on services.

    Action to take: Costco shares are worth owning as a long-term holding. Investors may want to build a partial stake now, and look to add to that position in a bear market when shares take a hit.

    Costco pays a 0.6% dividend yield, and periodically pays out special dividends that can greatly increase that overall cash payout.

    For traders, the September $800 calls, last trading for about $20.05, could see mid-double-digit returns on a further rally.


    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.

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