Fast Money Blog- 3/7/25
This was a highly volatile week on Wall Street. Let me explain to you in simple terms how it all shook out.
As you probably know, the Trump administration has announced placing tariffs on products imported from Mexico, China and Canada. Tariffs are essentially an additional tax on imports. More often than not, additional taxes on products that you and I purchase from stores such as, Walmart, Target and Costco, causes the prices on those items to rise 25% or more. A rise in the cost of imported products drives inflation higher, which is not good for the stock market.
If the new administration has its way, you and I will be paying higher prices for household products and gasoline, within the next 6 weeks. The concern for Simply stated, the combination of inflation and tariffs could cause a massive economic recession for the U.S.
In other news, two major companies in the retail space, Costco Wholesale Corporation (COST) and BJ's Wholesale Club Holdings Inc. (BJ), released their earning reports.
BJ’s Wholesale Club Highlights
BJ's reported fourth-quarter 2024 top-line revenue of $5.28 billion, down 1.5% year-over-year.
Q4 comparable club sales increased by 4.0% year-over-year.
Q4 Membership fee income increased by 7.9% year-over-year to $117.0 million, due to strength in membership acquisition and retention.
Q4 digital sales grew 26% year-over-year.
For the fiscal year 2024, total revenue was reported as $20.5 billion, up 2.7% from the prior year.
All of this is great news for S&P component BJ’s.
It’s was also great for S&P component, Costco who reported Q2 2025 top-line revenue of $63.7 billion, an increase of 9% year over year.
Membership fees for the quarter totaled $1.19 billion, up from $1.11 billion year-over-year. The company finished the quarter with 78.4 million paid memberships.
Comparable sales for Q2 rose 6.8% year over year while E-commerce sales grew 20.9% during the quarter.
Like others in the retail sector Costco leadership remains cautious as the impact of inflation and the potential impact of tariffs could make consumers spend less.
As I’ve said before, Costco makes a great long-term hold. Over the last 5 years the company has been well run and has consistently delivered rising top-line revenue. In addition, 5 years ago the stock was trading at $296 per share and today it closed around $959 per share.
Over the next 5 years I expect Costco shares to benefit from consumer demand for wholesale prices.
I expect volatility over the next 7 days to be extremely high because of economic uncertainty. As a Wealthy Investor member your job is to trade and invest in stocks that are fundamentally sound.
I will continue to guide you through these volatile times.
Tyrone Jackson, The Wealthy Investor