Assessing Costco Stock Performance: Sustained Growth or Time to Exit? Assessing Costco Stock Performance: Sustained Growth or Time to Exit?

By: Alex Freidmen

Costco Stock

Costco Wholesale Corporation COST stock is trading at new 52-week high levels. Following a seven-day rally, the stock briefly touched the $683.72 level on Jan. 12, closing out at $683.24. The stock has had a pretty good run over the past year, up about 45%.

Costco stock is making new highs. The chart above shows the trajectory of Costco stock over the past year. While the stock’s stride may prompt investors to consider cashing out, a dive into the fundamentals and the technicals does not suggest a rush to the checkout counter.

The on-balance volume (OBV) indicator is still treading up. OBV rises when volume on up days outpaces volume on down days, and vice versa. Hence, a rising OBV, as in the case above, reflects positive volume pressure that can lead to higher prices.

On the fundamental side, 2024 looks quite promising too. The retail giant plans to open 33 new warehouses, compounding its market presence.

A 9.9% YoY increase in retail sales for December 2023 further underscores its market leadership, sustained by adept execution and a massive membership base of 130 million.

When it comes to Costco, a cautious outlook for the first half of 2024 gives way to optimism in the latter part of the year. With grocery inflation stabilizing, the firm anticipates a rebound in discretionary spending, propelled by the easing of grocery disinflation and Gen Merch deflation.

Despite short-term hurdles, including potential saturation and supply chain risks, Costco’s relentless membership growth and robust financials position it as a compelling long-term buy.

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