January 3, 2011

Costco (COST)

Some thoughts on COST:
  • Increasing earnings growth - 13.3% year-end Aug 2011 vs 14.5% year-end Aug 2012
  • Currently seems a little expensive trading at nearly 22 times 2011 EPS estimate of $3.32 which equates to about 1.6 times the 2011 growth rate
  • Costco would need to trade up to about 1.75 times the 2011 growth in order to be profitable, and that's only about 6.7% upside from the current price
I generally look for stocks trading closer to their growth rate. The numbers get better when you look at 2012 earnings but I'm looking for shorter-term opportunities. Going to pass for now.

No comments:

Post a Comment