Wey How
Thematic Position Trader, Technology Stocks & Trend Following
Costco doesn't follow the stage 3 to stage 4 breakdown that pattern traders expect, because its fundamentals don't allow it and institutions are willing to pay a premium valuation for its stability. That replies to @ohiain, who notes Costco hit fresh all-time highs as institutional money rotates back toward defensive leadership. x.com
Costco is a wonderful execution story whose business only gets better through consumer pain. Its Kirkland brand is more valuable than 90% of consumer brands today. The stock has been too expensive this cycle, and not owning it in size was a mistake; it is worth owning, though the right entry level is unclear. Sysco's moves illustrate the deeper transformation underway. x.com
Costco is the preferred hedge against OpenAI's much higher valuation relative to revenue. Costco's cited $441B valuation comes with $275B revenue, versus OpenAI's $1.4T valuation and $50B revenue. x.com
Costco stock cannot be expected to make major gains soon at 40x earnings with only low double-digit growth. The company keeps executing well, yet the stock has been flat over the last two years. x.com
Costco looks like a runner in the making after consolidating for over 70 days, backed by strong membership renewal rates and a dividend increase. The weekly 21 EMA has proven a key pivot, and a move above 1,028 would confirm the breakout. x.com x.com
Scared money is flowing into Costco as a flight to safety, driving a box breakout. It may not be the best choice, but fearful buyers are not being selective right now. x.com
Costco and Walmart's valuations have diverged from most US food and beverage stocks. Most of the group trades near 20-year valuation lows, while these two have entered a mini-bubble. x.com
Costco is one of the few businesses likely to keep growing around 10% for the next 10-15 years, which makes a large drawdown doubtful. It has a large growth runway outside the US and Canada, with Asia especially promising, very low membership churn, and scale economies shared with members, so it grows more efficient as it expands. An aging population also helps. x.com x.com x.com
Costco's commitment to employees, such as covering a family's health care needs and adjusting work schedules for hard circumstances, drives a virtuous cycle. Being a good employer and corporate citizen and treating consumers honestly and fairly is rewarded with strong loyalty and financial success. x.com
Costco already looks quite overvalued, with a forward P/E that is crazy high. x.com
Discount retailers are a built-in recession hedge because consumers trade down rather than stop spending. Walmart, Costco, TJX, and Dollar General should benefit as worsening economic conditions send more shoppers through their doors. x.com
