Four of our Club holdings — Costco Wholesale (COST), Amazon (AMZN), Humana (HUM) and Bausch Health (BHC) — were in the news Thursday. Here’s how we feel about the developments. Costco The news: Costco reported sales for the retail month of October after the closing bell Wednesday evening. In the four-week period, net sales increased 7.7% year-over-year to $17.73 billion. Total comparable sales increased 6% in October , with gasoline price inflation positively impacting total reported comp sales by approximately 2.8%. The stock rose 0.5% on Thursday, recovering some of the prior session’s 3.3% decline. Keep in mind: Topline results are always important, but when it comes to retail, we especially like to analyze the same-store sales (also known as comparable sales, or comps) because this metric provides more insight into business trends. Analyzing comparable sales helps us understand if the company can attract more customers and sell them more goods. Also, since gasoline prices can be volatile, the 6% figure does not represent a pure sign of demand for goods. To get an even better sense of how the retail business is performing, Costco breaks out its comparable sales excluding the impacts from changes in gasoline prices and foreign exchange. Called “core comps,” this is the best metric to analyze because it removes the impact of items that are out of the company’s control. In the period, Costco’s total core comps increased 6.7%, beating estimates 6.1%. In the United States, specifically, core comps increased 6.1%, slightly missing estimates of 6.3%. The Club take: We continue to hold a favorable view of Costco, following another solid month of core comps sales growth and ahead of two potential catalysts — a special dividend payment and membership fee hike — on the horizon next year. We’re set to get Costco’s next full earnings report — which unlike the monthly sales numbers includes information on profits — on Dec. 8. With concerns of a recession on the horizon and inflation-wary consumers, we’re selective about our retail exposure. Costco is one of two retailers we own, along with TJX Companies (TJX), which has seen its stock rise more than 13% over the past month. Amazon The news : Amazon expanded its hiring freeze to its entire corporate workforce in a memo to employees Thursday. “We anticipate keeping this pause in place for the next few months” due to worsening economic headwinds, Amazon’s HR chief Beth Galetti wrote to the staff. Last month, the company paused hiring in its retail business. As we learned from Amazon, when it reported weaker earnings and guidance last week, the company still has some work to do to address its cost structure, which ballooned on the retail side with massive hiring to meet crushing demand early in the Covid-19 pandemic. Now that Covid is less of a problem, Amazon has been trying to right-size its operations. The Club take : We’re encouraged to see that Amazon is recognizing the need to further…
Read More: 4 of our stocks are in the news. Here’s the Club’s take on each