The Party May Be Ending For Costco's Stock
Summary
- Costco's stock price has surged 50% since April last year, pushing its PE ratio from 45x to 62x, despite modest sales and earnings growth.
- Valuation multiples easily surpass those seen on Walmart's stock at its bubble peak in the late-1990s.
- Sales are growing at around just 4% annually, while margins face pressure from Trump's tariffs on China.
- Recent stock price weakness could become self-fulfilling as investors who bought on the basis of the stock's uptrend are forced to reverse their positions.
Analyst’s Disclosure: I/we have a beneficial short position in the shares of COST either through stock ownership, options, or other derivatives. 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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