Costco: Hard To Be Bearish But Also Too Expensive For Buys (Archive)

This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.

Elevator Pitch

• Price hikes are only partially offsetting volume declines, but a rise in membership fees can lift overall comps in the future as customers' membership renewal periods trigger.
• Warehouse expansion-led growth is performing better than I expected, as productivity and return metrics such as fixed asset turnover and pre-tax ROICs have shown no signs of deterioration.
• Valuations are even higher vs median comps than last time but COST stock is still ticking along, supported by the fundamental tailwind of earnings growth expectations.
• Buyer momentum is slowing down at key resistance levels on COST vs SPX500, reducing the chances of continued outperformance.
• Costco is piloting retail media campaigns, with initially promising results. The scale-up of these campaigns are a key monitorable that can lead to upside risk via volume surprises.

Read the full article here.