Business

Kramer says he plans to own Costco over the long term. That’s why

CNBC’s Jim Kramer said Friday that he intends to own Costco for a long time because the wholesale retailer has the most valuable quality he’s looking for in a warehouse: price power.

“Costco has the # 1 most important quality among great stocks: it is a company that can raise prices at will,” said the Mad Money presenter.

“They can snap their fingers and become more profitable almost overnight. This makes Costco a member of a very small club, “along with the likes of Chipotle, Apple, Netflix and Amazon,” Kramer said.

Kramer named Netflix and Amazon Prime as his favorites, saying the services could raise prices and most consumers will stick with them. “I think Costco is no different,” he said.

Kramer’s comments on Friday followed reports from Charlie Munger, Berkshire Hathaway vice chairman and longtime business partner Warren Buffett. According to an Australian financial survey, Munger praised Costco’s purchasing power and said he believed its digital presence would grow to the point where it could potentially compete with Amazon.

Kramer said he “can’t agree more” with Munger’s perspective on Costco’s internet business.

Kramer also said Costco demonstrates the importance of maintaining a long-term perspective. To demonstrate his point, he noted that Costco reported earlier this week that its November comparable sales were up 14.1%, while Wall Street analysts had expected 15%.

Kramer said that at first he thought it was time to cut back his charitable foundation at Costco, but further consideration changed his mind.

“There are times when even the great retailers miss these numbers a bit, and I thought it was just Costco’s turn. The hardest part about long-term ownership of these stocks is just having the fortitude to stick with them. “

Login Now for the CNBC Investment Club to follow Jim Cramer’s every move in the market. Disclosure: Kramer’s Charitable Foundation owns stock in Amazon, Costco and Apple.

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