Opinions
Brianne Gardner
Costco Wholesale Corporation
COST-Q
TOP PICK
Mar 19, 2025
Stock price when the opinion was issued
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Likes the company, but has never owned the stock. It's always been screened out because of valuation. Trading today at 53x PE on this year's earnings. Great business model, and the street recognizes that.
You have to look at these companies in terms of what can go wrong. If we go into a sustained, negative economic period, there's going to be a lot of hurt on a company like this.
Sank 2.9% today one earnings. However, revenue, EPS and comp. sales beat. Are seeing more younger members. To combat tariffs, are altering their supply chain to hold down prices. It's absurd that the street is punishing them for disappointing renewal rates of online subscribers--this is an excuse to sell. Charlie Munger was a massive shareholder of COST. Over the last 20 years, has returned 19% annually--one of the best stocks ever--vs. 11% by the S&P. With this pullback, it is cheap.
Profitability is improving; expanding due to e-commerce growth, Kirkland signature, and ad revenue. Reputable brand. Opens 25-30 stores a year. Adding footprint in China. Likes the stability and steady growth. Performs well even in uncertain markets. Impressive membership renewal rate over 90%, and that recurring revenue is a major strength. Sales are still growing from both price and traffic increases. Yield is 0.51%.
(Analysts’ price target is $1067.36)Its stability can weather volatility long term. Expecting 9% EPS growth in both 2025 and 2026. Fundamental score is 9/10.