Is BJ’s Wholesale Club a Good Investment?

PHOTO CREDIT: BJ’s

OVERVIEW

BJ’s Wholesale Club Holdings Incorporation is a company based in the United States. The company operates a chain of 221 warehouses in 17 states across the nation. The company sells food, clothing, gas, and many other goods and services through these stores. The company was founded in 1984.

Why You Should?

  1. BJ’s Wholesale is a good reopening play in an investor’s portfolio. Customers like small business restaurants that were shut down during the pandemic will shop at bulk retailers like BJ’s. In addition to this, BJ’s and its main competitor, Costco, have reported strong sales growth during this reopening time.
  2. The COVID-19 pandemic has also benefited the company. As the pandemic took a stronghold across the entire country, many people bought goods in bulk to go through and stay comfortable in lockdown. This benefited the company and its investors go through rough economic times.
  3. BJ’s is a safe investment option due to the essential nature of the products that it sells. Regardless of the economic times, consumers will always purchase things like food and clothes to maintain a high quality of life. This will benefit the company to maintain stable sales during a recession and will also benefit investors in the company.
  4. BJ’s has reported rising revenues and profits over the past couple of financial years. This has helped the company grow and expand its business and has also benefited investors in the company. In the financial year of 2021, the company reported revenues of around 15.43 billion and profits of around 421 million. Both of these metrics are higher than what the company reported in the financial year of 2020 when they had revenues of around 13.18 billion and profits of around 187.18 million.
PHOTO CREDIT: Yahoo Finance

Why You Should Not?

  1. The company faces tough competition in the retail industry. Some. of these competitors include Walmart, Costco, Amazon, Target, and many others. This competition might hurt the company and its investors in the future.
  2. In my opinion, there are better retail stocks to invest in. I prefer Costco and Walmart (owner of Sams Club) because of better growth opportunities and a larger scale of business. For example, Costco has a great in-house Kirkland Signature brand and Walmart is the largest retailer in the world.
  3. BJ’s operates a business with a thin profit margin due to the high overhead cost of the retail business as well as comparably lower e-commerce sales. This might hurt the company and its investors in the future as any headwind will cause the company to report no profits (break-even) or even a loss.

MY OPINION

In my opinion, I think that there are better retail stocks to invest in due to tough competition as well as BJ’s low-margin business. However, the company saw benefits from the pandemic and grew its revenues and profits. It is also a great reopening play and a safe investment option.

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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Aaditya Patel

Aaditya Patel

Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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