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Costco (COST) reports earnings after the close Thursday. As you already know from my weekly market preview blog, I am a COST shareholder. However, I think this quarter also holds the potential for a major upside surprise. COST is due to raise its membership fee and I don’t see why they wouldn’t act today.

In their last earnings conference call, CFO Richard Galanti said that the last three increases have been on average 5 years and 7 months apart. He further said that the last one was June 2017 and so 5 years and 7 months would be January 2023 and that it’s a matter of “when not if”. With comps up 7.4% in January and 7.3% in December, COST would be acting from a position of strength. If they do in fact increase the membership fee, expect the stock to jump. I like the COST Mar03 $505 Calls which can be had for ~$1.70 to speculate on this.

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