Costco and Airbnb


IN THIS ISSUE


Costco

Steady long term growth, only going to continue paying more dividends and growing into more parts of the world.


Airbnb

This company is geared for the changing times. Great possibilities for the future.

Costco: COST 

This company is one that I personally go to and always run over the budget before walking out. They have the lowest rates on gas, many commodities such as tools, food, clothing, services and much more. We like this company because they have lower prices but maintain the highest standard of quality in their products. They keep the low prices because they sell you much more product in higher quantities. For example, you can buy a dozen paper towels in one package instead of one or two. This reduces their collective shipping costs and also allows you to not go back to the store every other week buying more paper towels. 


Costco is membership based and it has recently accelerated in growth. This company will continue to grow as they have many good things to talk about. (Chart below)



Because the government has been printing out more money, the concern is that inflation will increase dramatically, which reduces the value of your current cash sitting in the bank. We think Costco will be an excellent hedge against this phenomenon because consumers will be looking to buy large amounts of product in one sitting now, instead of buying small quantities over time because buying large quantities now will save you money before inflation eats away at your cash. 


Price Forecast:

Costco should maintain steady growth and hedge against hyperinflation as they sell things below market value because of the wholesale prices. 

Current Price: $439

Price Target in 6 Months: $480


Final thought on Costco: This company will continue to be successful because they have implemented a durable business model that can hedge against inflation and they will be the go to place to buy goods and services if inflation worsens.


Disclosure: We do not own COST securities/shares at the time of publication.

Airbnb: ABNB

We wanted to revisit Airbnb in this week's article to highlight some potential reasons to invest in it or why to possibly wait to invest in it… Now we purchased shares in ABNB last week because we see the value in the company and the path that it is going down. There is a little skepticism with the COVID-19 delta variant causing some havoc and that might be a valid reason to continue to hold out, however it's extremely hard to time the market so maybe just start buying shares on a regular basis and not worry about the current price that day. 


ABNB will go ahead and report earnings on August 12th after hours for Quarter 2 and with the economy reopening, people traveling over the summer and just having the freedom to travel we expect to see some impressive numbers. If you look into how much investors make by purchasing a house in a prime location and using it as an Airbnb the numbers are often insane… They will most likely post pretty good numbers this quarter and continue to excel. “Airbnb's first-quarter revenue of $887 million was well above the estimates of $711.44 million. Although shares rose slightly following the earnings release, Airbnb's stock is still down 8.1% year to date.” Look to see if ABNB’s numbers are impressive again this quarter. 


In an interview on CNBC the CEO of Airbnb talks about the future of the company and the plans it has. He talks about a new global marketing campaign that would likely bring in guests and hosts to the platform. Airbnb’s platform is one of the reason’s we really like the stock, it's extremely user friendly for both the guests and the hosts which is why people keep coming back. 


Price Forecast:

The price should continue to increase over time 

Current Price: $149.98

One Month: $155.50

One Year: $185.00 

Two Years: $220.00


We could see even higher numbers than that if we get the pandemic under control and move back to a more travel friendly world. The younger generation care less about material things and more about experience which Airbnb has catered to in the best way possible. Why stay in a boring hotel while you could rent a whole house out instead. 

Now on a more speculative note… There's a new company making a name for itself called “Swimply." They are basically Airbnb for pools. That's right you can rent out a private pool by the hour on this app. I could see Airbnb going after this company and trying to acquire it. Not saying they will, but it would make sense. 


Keep an eye on this stock this week and in the future because it could be huge. 

All stocks talked about we have invested in, and do not intend to give advice nor recommend acting upon the information.

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Until next week,


Brad Mitchell

Colby McCoy

and the Optifinancial Team

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