Why Costco Stock Is A 'Port In The Storm' And 4 More Retail Picks From Bernstein

Bernstein smells something cooking at Costco Wholesale Corp COST and no, it's not the famous $1.50 hot dog. 

What To Know About COST: Bernstein on Tuesday initiated coverage on Costco with an Outperform rating and set a price target of $586, citing the company's exceptional track record of better-than-expected quarterly results. 

The analyst firm also highlighted Costco's ability to consistently outperform the S&P 500 while putting up "exceptionally good" numbers across all key performance indicators. 

"As the result of these reliable results, Costco has become a destination defensive stock, a much-coveted port in the storm of macro uncertainty that's engulfed the consumer landscape," Bernstein wrote in a new note to clients. 

From Last Week: This Is What Whales Are Betting On Costco

The analyst firm believes this explains why Costco is trading near all-time highs and expects the stock to continue to do so as macro uncertainty persists.

In the short term, Bernstein is anticipating continued strong member growth and merchandise sales given Costco's more affluent customer base. The firm also noted that Costco is a limited-assortment retailer, which gives it much more flexibility than much of the competition. 

Costco also carries significantly less inventory risk than competitors, so Bernstein doesn't anticipate any negative surprises like what happened with Target Corp TGT. Longer term, the firm expects continued 2% store growth, member growth and an increase in membership fees.

Bonus Stock Picks: Bernstein also slapped Outperform ratings on several other retail names. Here's a look at the stocks that made the list, as well as their 12-month price targets.

• Kroger Co KR: $58 price target
• Albertsons Companies Inc ACI: $26 price target
• Target Corp: $190 price target
• Floor & Decor Holdings Inc FND: $112 price target

Bernstein has Market-Perform ratings on Walmart Inc WMT, Lowe's Companies Inc LOW and Home Depot Inc HD.

COST Price Action: Costco has a 52-week high of $612.27 and a 52-week low of $406.51.

The stock was down 1.53% at $481.16 on Tuesday, according to Benzinga Pro.

Photo: Mike Mozart from flickr.