Costco Wholesale Corporation (COST)

The stock got too high. He had to sell half his position. Is concerned with the memberships renewals and may sell the rest.

They make a lot of money primarily from his wife and mother-in-law, but also from about 80 million other members ;)  Likes it, in his momentum mandate. Likes visibility and stickiness of membership revenue. Once people pay the membership, they become loyal shoppers. Pretty robust new-store expansion, even though it's been around for 4 decades. Margins are good and stable. Doing more and more in e-commerce.

Perennial knock against it is the valuation. Always expensive. Any day that ends in "y" is a good day to own, all the better with recent pullback. His firm is long and strong this one.

If you separate the valuation of COST and the business of COST, there aren't too many businesses that are better. Phenomenal business because it creates so much value for its customers, especially in these times of inflation. As for growth potential, still expanding into new markets, so really good growth profile.

Valuation becomes the sticking point. Trading at 40x PE, too rich for the cashflow. Doesn't think it'll get down to 30x PE, but perhaps 35x. For investment success in any stock, you really need to get earnings growth and multiple expansion. Those are the twin engines of your compounding. If you get earnings growth but it's less than expected, the multiple can contract and your gain is zero. Watch and wait on this one.

Personal investing rules are good. COST has always been too expensive. He doesn't know their PE, but likely well in the 40s. It was long above 50,

It's back to April's lows. Is a quality company. They have a wide moat. Can hold long term, but the sector is not great now. Is up 135% over the past 5 years. But it would fall to $850--still wouldn't sell.

(Note the short timeframe.)  Pulled back from February highs, but she still really likes it. Stock has some support at this level. Almost double from a couple of years ago. Shoppers are loyal. Sales are growing faster than WMT and TGT. Digital commerce finally becoming a real contributor. Growth story remains intact. Sees almost 20% upside from here. Fundamentally 10/10.

He has yet to find a better business model in retail. Uses scale to secure low prices, which they pass along to consumers. Sales of Kirkland brand are twice that of KO. US is 3/4 of the business, 900 stores worldwide, opening more.

Always too expensive, but has pulled back in last little while. Getting close to 30x forward PE, so starting to pique his interest.

Shares have lagged lately, but historically has been strong. Trades at 44x PE, which high in this market. (Walmart is 40x.) COST is never cheap, but is a partial buy under $900.

Used to own this name, but came out earlier this year. Leaking like a balloon, trading below all the moving averages. Don't put any $$ to work here until consumer sector starts performing better.

Look at the sector. He has virtually 0% weighting in the consumer. From homebuilders to retailers to restaurants to leisure travel to airlines, all are performing poorly. WMT has been the standout in the group, but COST is not.

Never cheap. Now trading at 45x PE. You can start a position now. Is the best buy in the industry, but is hurt by a magazine story saying that the best times are over. A good stock.

Nice run, starting to come over. May have had a double top, look for $1050 to be significant resistance. Old support range looks like $860-900. 

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.

 They report Thursday. Likes it, but they are stuck in purgatory with a high 53x PE. Wait for it to fall below 50x PE. Expects more downside.

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.

Has maintained a premium valuation for a long time. If you're a growth investor, you could buy this one, but he's not wild about the valuation. Wait for a market correction.