BING-JHEN HONG
Performance Assessment
Costco (COST) has performed more or less in-line with the S&P500 since my last update:
So I think my 'Neutral/Hold' view has been an accurate one.
Thesis
The company reported its Q3 FY25 earnings (the
Costco: Q3 Results Point To Growth Acceleration Ahead (Rating Upgrade)
Summary
- Lower agricultural commodity prices outlooks can help Costco strengthen its market position, pass savings to customers, and gradually expand margins.
- Investments in new warehouses can drive higher traffic overall and accelerate revenue growth despite initial cannibalization of existing warehouses.
- Costco’s valuation premium vs. comps is justified as its superior business model has delivered vastly superior shareholder returns. Encouragingly, the current COST premium vs. comps is slightly below historical averages.
- COST's technicals vs. SPX500 look good, as the ratio prices are bouncing off a key support level in a strong way.
- Tariffs remain a risk that can put pressure on margins, but import data and commodity price trends suggest limited impact so far.
Providing alpha-generating investment ideas. I am an independent investor managing my family's portfolio, primarily via a Self Managed Super Fund. You can expect my articles to deliver a clearly structured, evidence-based thesis. But first and foremost, I encourage readers to judge me on my performance.I have a generalist approach as I explore, analyze and invest in any sector so long there is perceived alpha potential vs the S&P500. The typical holding period ranges between a few quarters to multiple years.It is a good idea to review the ratings history for the articles published by authors. This gives you another indication of how often the author's recommendations work out, which is a proxy for genuine investing and alpha-generating skill.Associated with Seeking Alpha account VishValue Research.
Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in COST over 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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