Costco (COST) is an Incredible Growth Stock: 3 Reasons Why

Core Viewpoint - Growth investors are focused on stocks with above-average financial growth, but identifying such stocks can be challenging due to associated risks and volatility [1] Group 1: Growth Stock Identification - The Zacks Growth Style Score simplifies the process of finding promising growth stocks by analyzing a company's real growth prospects beyond traditional metrics [2] - Costco (COST) is highlighted as a recommended stock with a favorable Growth Score and a top Zacks Rank [2] Group 2: Earnings Growth - Earnings growth is a critical factor for growth investors, with double-digit growth being particularly attractive [4] - Costco's historical EPS growth rate is 16.2%, with a projected EPS growth of 11.9% this year, surpassing the industry average of 10.7% [5] Group 3: Asset Utilization - The asset utilization ratio, or sales-to-total-assets (S/TA) ratio, is an important indicator of efficiency in growth investing [6] - Costco's S/TA ratio is 3.73, indicating that the company generates $3.73 in sales for every dollar in assets, significantly higher than the industry average of 1.46 [6] Group 4: Sales Growth - Sales growth is another key factor, with Costco expected to achieve a sales growth of 7.4% this year, compared to the industry average of 5.5% [7] Group 5: Earnings Estimate Revisions - Positive trends in earnings estimate revisions are correlated with stock price movements [8] - Costco has seen upward revisions in current-year earnings estimates, with a 0.1% increase in the Zacks Consensus Estimate over the past month [8] Group 6: Overall Positioning - Costco has earned a Growth Score of A and carries a Zacks Rank 2 due to positive earnings estimate revisions, positioning it well for outperformance [10]