Costco Trade Call - Overpriced Despite Solid Fundamentals

3 days ago

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"Costco's been drifting lower, again, not because the business is broken, but because the expectations were just way too high. The stock is at a 52-week low and trading for 50 times earnings, which looks attractive at first. However, when I hit the analyze button, the numbers showed that if you buy at today's price, you'd essentially break even on a discounted cash flow basis. Bottom line is, despite being a great company, it's overpriced right now. So, guys, good news. Move on. Find something else."

The analyst acknowledges Costco's strong business model and steady performance but highlights that its current valuation leaves little margin for upside. The discounted cash flow analysis suggests that the return would be effectively zero, prompting a decision to avoid buying Costco at current prices.

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