Chart of the Day: Costco Investors Show a Bit of Fear Before Earnings
We could see a large move for this big retailer after earnings are released this week.
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The problems for retail companies with pricing and inflation are well documented. Costco (COST), which seems to be immune from such issues, will report earnings this week.
If recent guidance is any clue, the company is likely to beat on both sales and earnings. The last two months Costco showed strong growth trends across various metrics, and with higher gasoline prices the turnstiles in the stores have been busy (shoppers like to go in after filling up their tanks with cheaper Costco gas).
We have been in this name for years and each pullback was a great opportunity to add the stock. We continue to like the prospects going forward, with little downside risk and a ton of upside potential.
The technical picture is strong but a recent move lower from highs could be a concern. Yet, before earnings are released we would rather have the stock pulling back to support, which is what happened this past week after surging to new all-time highs.
Momentum is slowing down, so perhaps the recent run higher was too much, too fast. We’ll find out if the market conditions and investors like the report. If COST pulls back, it may be just another in a long line of great buying chances.
We like Costco in TheStreet Pro Portfolio and rate it a One, or “buy at anytime.”
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At the time of publication, TheStreet Pro Portfolio was long COST.
