Sell Costco: Bad Price Despite a Great Business

about 1 month ago

"Costco is one of the best-run retailers in the world with loyal customers and consistent profits, but it's trading at a huge premium compared to its historical average. With a one-year price to free cash flow of 53 and a one-year PE of 51, the current price leaves almost no margin for error. Even a minor slowdown could result in negative returns over the next decade. For all its strengths, paying today's price doesn't make sense – that's why I believe it's time to sell or avoid buying at these levels."

The speaker acknowledges Costco's operational excellence but warns that the stock is overpriced relative to its historical valuation. The high multiples suggest that even small setbacks in growth could result in poor long-term returns, prompting a sell call.

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