Why Costco could be a winner in the national gas shortage

Brian Sozzi breaks down possible winners from the nationwide gas shortage amid the fallout from the Colonial Pipeline cyber attack.

Video transcript

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MYLES UDLAND: All right, welcome back to Yahoo Finance Live on this Wednesday morning. Order of the day is prices. We see consumer prices going up and, Sozzi, concerns over prices at the pump rising as well. Now we talked to Robert Sinclair of AAA earlier in the program, who told us there's basically nothing to worry about, as it relates to the gas supply. Consumer behavior in the last day or so suggests that many people tend to disagree. And I know you have your eye on one potential winner from this-- I don't know-- whatever we want to call it-- gas hoarding panic, something like that, breaking out in the US right now.

BRIAN SOZZI: It's a great way to put it, Myles. So we're just trying to connect the dots here for viewers/investors/traders. And I'm locking in on Costco here. You know, I did a little analysis this morning here. 88% of Costco's warehouses-- they have 559 warehouses in the US. 88% of them, in fact, have gas stations. So they are one of the largest fuel distributors in the country, just in terms of gas stations. Interesting to note, I also found 21% of those gas stations are along the East Coast, Florida being the most important market for them or largest market for them on the East Coast in terms of gas stations. They have 27 stations there.

And the thesis is pretty much-- it's pretty simple. Consumers or members are going to these-- likely going to these gas stations right now, waiting in long lines. And after they get their gas, they're probably going inside to Costco and buying merchandise. Worth noting here, the only folks that can use Costco gas stations are, in fact, Costco members.

So Costco is likely seeing a two-fold impact here. One, they're selling more gallons of gasoline on higher prices. That benefit sales and profits. And then, two, people are parking their cars and probably going in to the warehouse and stocking up on goods out of potential fear of being out of stock in gas. Again, just tying all-- connecting all the dots here.

And interesting to note, too-- Costco's April sales, they report on May 5th, was a blowout. Same store sales up 30.4%. Why? Because they saw higher prices for gas. So gas prices have been going up across the country. Costco was already winning before this gas shortage. Excluding gas prices in April, Costco sales were up 20-- about 25% in the US, reflecting that people are, in fact, going into the stores, after they fill up on gas. Tying it all together for you, Julie.

JULIE HYMAN: You know, Brian Sozzi, I suppose if Costco were sort of a public benefit corporation, instead of a moneymaking operation, they might say to people, you don't have to hoard gas. If Robert Sinclair of AAA is right, we've got plenty of gas. Maybe you don't need to come and hoard it or fill up or maybe not allow people to come and put it in canisters versus in their car. But I guess, that's not the way things work.

BRIAN SOZZI: Don't hoard gas--

MYLES UDLAND: Well, look--

BRIAN SOZZI: Key message of the day.

MYLES UDLAND: Yeah, look, I mean, I think a learned behavior here is, we all learned about hoarding. I don't know how long the echo boom of that [INAUDIBLE] consumer behavior is going to be. But there's certainly now, given what a lot of us went through at the grocery store March, April 2020, certainly now a reflex to say, oh my gosh, this one specific thing might, for some brief period of time, be in short supply. Let me go buy as much as I can.