Analysis: COST

After you receive this Alert we will buy 25 shares of Costco (COST) at roughly $276.17. Following the trade, COST will represent 3.02% of the portfolio.

We talked about our desire to pick up some Costco in our first Alert of the morning here. Now that the market has moved an additional leg lower from the open, we'll pick at those shares now with this small buy.

After this purchase we will finally have put back the roughly $107K we raised earlier in the week through our Alerts here and here. It was tough to stay disciplined and not re-deploy this precious cash on the first drop Monday, and our playbook of slowly spreading it out over multiple days has been the right call. Indeed, it has been terribly painful to buy and we are yet to see the lowest stock prices just yet, but we like how we have accumulated numerous low prices across various positions over the past few days.

We like Costco into weakness because we believe consumers will flock to its stores and bulk up on items in preparation for a potential outbreak. Thinking longer term, Costco is simply a high-quality retailer with an everyday low-price business model that resonates with all types of consumers. When we talk about "high-grading" the portfolio and circling the wagons around the best companies during times of indiscriminate selling in the market, Costco is the type of name we want. Plus, we like how the company has the ton of cash on the balance sheet and has the optionality to offer a special dividend to shareholders.