Broken Moats
Family-Office Long/Short Research, Variant Perception
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.comÂ
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.comÂ
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.comÂ
Costco's slow growth in a finite market does not justify 30x earnings. It is a good model, but new members joining to buy in bulk to save money is not the strength bulls think it is. x.comÂ
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.comÂ
Costco could gain massive market share as AI shopping agents route spending away from Amazon. Through Meta's Muse, one household bought sporting gear from Costco and Dick's, a Frigidaire from Costco and a Target e-gift card, well over $1K that bypassed Amazon, which is blocking Muse shopping. Amazon's retail strategy needs to evolve or it could quickly become the next Sears. x.comÂ
Costco's premium multiple looks unsustainable, at 40 times next-twelve-month earnings with EPS growing only about 10%. Stocks with PEG ratios like that are not worth owning, as multiple cuts at former compounders such as FICO and Intuitive Surgical showed. x.com x.comÂ
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.comÂ
Costco's demand looks strong enough to keep holding the shares. All four Costco warehouses on Oahu were massive and insanely busy, Hawaii has seven in total, and people on Molokai take boats to Maui just to load up at Costco. x.comÂ
Costco is an amazing company, but at roughly 40x forward earnings its stock is pricing in a lot of perfection. x.comÂ
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.comÂ
