Costco still eager to push up ahead of earningsShares in Costco Wholesale Corp (symbol ‘COST’) reached 18-month highs in the last fortnight amid ongoing strong sales. Recent general positivity in stock markets comes mainly from the likelihood that the Federal Reserve has reached its terminal rate for this cycle and might start to pivot from the second quarter of next year.
Costco’s earnings report for the financial quarter ending in November is expected on Thursday 14 December after hours. $3.44 is the consensus EPS: the 15 estimates range from $3.25 to $3.66. One estimate was revised down in the last four months.
‘One of the negatives for buyers of Costco’s stock is that, considering the sector, its dividend history doesn’t compare favourably with EPS,’ said Michael Stark at Exness. ‘The company’s fundamentals, in terms of revenue, sales, memberships and other numbers, look good, but PE around 40 raises some concern over valuation.’
A double top is visible on the chart; however, this pattern has not completed yet so acting based on it would usually be risky, especially in the runup to earnings. As above for Broadcom, $600 for Costco is an important resistance as a round number which might resist testing without a significant new driver.
The long uptrend in 2023 remains valid for now, but buying the CFD just below an all-time high isn’t a typical approach except for short-term traders attempting to exploit a potential breakout. A retest of the area around $575 might give a better entry for buyers, but that depends on how shareholders perceive the earnings report.
