Baker: Costco shines when the economy softens

Core Viewpoint - The upcoming Amazon Prime Day is seen as an indicator of the health of the US consumer and overall market conditions [1][2] Consumer Behavior - There is a growing concern among consumers regarding rising costs, leading them to seek ways to save money [4] - In previous economic downturns, companies like Costco have performed well as consumers look for cost-effective options [4] Company Analysis: Costco - Costco has a high membership renewal rate of over 90%, providing a cushion for profitability [5] - Despite concerns about consumer spending, Costco's model allows consumers to stretch their dollars by purchasing in bulk [6][8] - The stock is currently valued at approximately 47 times forward earnings, indicating a high valuation [5] Economic Impact - Moody's estimates that each week of a government shutdown could negatively impact quarterly GDP by 0.1% [9] - The current government shutdown has not yet significantly impacted consumer behavior, but concerns are rising as it continues [10][11] AI Market Perspective - The AI sector is viewed as a long-term investment opportunity, with ongoing developments expected to influence the market positively [13][14] - Despite potential overvaluation, continued investment in AI-related stocks is encouraged as the market evolves [14]