Costco Wholesale Corporation (COST) | Daily Alert September 21
Costco Wholesale has been another major beneficiary of the pandemic—big box stores have thrived. The combination of low prices and enhanced on-line pick-up and delivery services combined with the shut-down of many small businesses 4 have boosted sales and profits.
The company’s third-quarter 2020 results (to May 10) were solid. Sales were up 7.3% year-over-year, to $36.45 billion. Net income for the quarter was down slightly from the same period last year, due mainly to unanticipated costs related to the coronavirus.
The fourth-quarter results should be better, based on sales. Costco reported an 11.1% increase in June sales, a 14.1% jump in July, and a 15% improvement in August.
There is no reason to believe this pattern won’t continue throughout the pandemic and beyond, although online sales growth may slow somewhat.
Gordon Pape, Internet Wealth Builder, buildingwealth.ca, 1-888-287-8229, September 14, 2020
Universal Electronics Inc. (UEIC) | Daily Alert September 23
Universal Electronics is a major producer of universal remote controls that subscription broadcasters (cable and satellite), TV/set top box/audio manufacturers and others provide to their customers. The company pioneered the universal remote, named the ‘One for All’, which was quickly adopted by consumers after its launch in 1986. Since then, the company has expanded into a range of remote control devices for smart homes, safety and security and other residential and commercial applications, driven by its proprietary technology. The company has a global roster of customers, with about 40% of sales produced outside the United States.
The shares appear to be approaching support at 38. UEIC shares have 17% upside to our 47 price target. We are patient for now with UEIC shares because of the larger opportunity set on the horizon, potential for better results in the third and/or fourth quarter, and the relatively low valuation.
UEIC shares trade at 11.2x estimated 2020 earnings of $3.57 and 9.3x estimated 2021 earnings of 4.31. The estimates appear to have bottomed out. BUY.
Bruce Kaser, Cabot Undervalued Stocks Advisor, cabotwealth.com, 9787455532, September 16, 2020
1-800-FLOWERS.COM, Inc. (FLWS) | Daily Alert October 6
Covid-19 has been a boon for 1-800-Flowers (FLWS), a leading e-commerce seller of flowers, gourmet snacks and fruit, and candy. In the June quarter, sales jumped 61% and per-share profits surged 277%. For the September quarter, management targets sales growth of 40% to 45%, fueled by a 70% increase in e-commerce.
In August, the company acquired a leading e-commerce provider of personalized gifts, including digital printing, engraving, and embroidery.
Shares have blossomed in 2020, gaining 74%. Yet the stock has retreated 23% from a recent all-time high, opening an attractive entry point. To be sure, 1-800 Flowers is a speculative holding, partly because of its large short interest. Investors who sell short borrow a stock and sell it, betting they will buy the stock back later at a lower price. In addition, the company’s founder and family trusts control most of the voting power.
Still, 1-800-Flowers seems capable of climbing at least 15% in the year ahead. The stock is being started as a Buy.
Richard J. Moroney, CFA, Upside, www.upsidestocks.com, 800-233-5922, October 2020