Jim Cramer says Costco just reported a 'beautiful quarter' and its stock is worth owning

CNBC’s Jim Cramer touted the strength of Costco‘s (COST) business on Wednesday, the morning after the membership-based retailer reported solid quarterly results.

“It was just a beautiful quarter,” Cramer said on “Squawk on the Street,” as Costco sees “inflation going down rather rapidly” across a range of different products and experiences “very little shrink” relative to other retail peers. Shrink is an industry term that refers to inventory losses due to theft, damage or vendor fraud.

Shares of Costco rose more than 1.5% Wednesday apiece, pushing the stock’s year-to-date gains to around 23%. That’s better than the S&P 500‘s 11.6% gain so far in 2023.

However, the initial reaction to Costco’s after-the-bell earnings report — which topped Wall Street’s sales and profit expectations — was somewhat sour. Some of the disappointment may stem from the fact Costco “didn’t give you a special dividend” and “‘didn’t raise prices for members,” Cramer said. Investors have been anticipating both actions for quite some time.

With those catalysts still looming, Cramer said that multiple Wall Street firms including Goldman Sachs raised their price targets on Costco shares, which he suggested bodes well for the stock going forward.

Cramer’s Charitable Trust, the portfolio used by the CNBC Investing Club, owns shares of Costco. The Club’s other primary retail holding is TJX Companies (TJX), the parent of TJ Maxx, Marshalls and Home Goods. Cramer is set to interview Costco CEO Craig Jelinek for Wednesday evening’s “Mad Money.”