Costco: Similarities To Coca-Cola In 1998

Yannick Frey profile picture
Yannick Frey
1.03K Followers

Summary

  • Costco is a sought-after stock, as evidenced by its rising share price over the past 10 years. Total stock price return averaged 20.6%.
  • The sharp rise in share price makes the stock expensively valued. This reminds me of Coca-Cola in 1998.
  • The Fed's current policy does not justify a high valuation of the stock.
  • Costco will have to continue to perform in the coming years to justify this high share valuation. Unfavorable quarterly earnings could correct the stock significantly.
  • Expectations for future earnings are high and probably too high. Therefore, I think the share is a hold.

Grocery Shopping

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Introduction

Charlie Munger serves as independent director of Costco (NASDAQ:COST). He is a long-term investor who is highly regarded for his principles, philosophy and, of course, his investment skills.

Costco is a sought-after stock, as evidenced by its rising share price

This article was written by

Yannick Frey profile picture
1.03K Followers
Yannick is a passionate investor from the Netherlands who shares his analyses with other investors on Seeking Alpha. In doing so, he looks for companies with the following characteristics:1. Companies that are growing in both revenue, earnings and free cash flow.2. Companies that have excellent growth prospects.3. Stocks with favorable valuations.He prefers steadily growing companies with high free cash flow margins, dividend stocks and stocks with generous share repurchase programs.Disclaimer: My articles do not provide financial advice, they reflect my own findings and insights.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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