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Should I buy costco stock to make a profit? If so what are the best entry and exit strategies as well as hold time?

3/7/2025 11:10pm

``` The deep research logic is organized as follows: Okay, let's tackle this question about whether to buy Costco stock for profit. The user is interested in stocks like AMZN, AAPL, GOOGL, TSLA, and TGT, and they've been looking into dividend stocks and sectors with double bottom patterns. They also asked about entry/exit strategies and hold time. First, I need to look at the provided references. The latest data from Reference 1 shows Q2 2025 revenue of $63.72B, net income $1.79B, and EPS $4.02. The P/E ratio is 56.34 (Reference 4), which is quite high. The technical indicators from References 5-7 show a bearish MACD, oversold RSI, and price below moving averages. The average price target is $1050.1 (Reference 9), which is higher than the current price of $972, suggesting upside potential. The user is focused on profit, so I need to balance growth potential against valuation. Costco's strong fundamentals (high membership renewal rates, e-commerce growth) support long-term holding, but the high P/E might indicate overvaluation. The technicals suggest a possible pullback, which could be an entry point. For entry strategies, considering the current price is below key moving averages (MA10, MA20, MA60), a breakout above these levels could signal a reversal. Alternatively, waiting for a pullback to support levels (Bollinger Band lower) might offer a better entry. Exit strategies could be based on reaching the price target ($1050), technical resistance levels, or profit-taking on positive catalysts like earnings beats. Hold time could be 6-12 months for the price target, but if the user is more risk-averse, a shorter term with tighter stops might be better. I should also mention the dividend aspect since the user is interested in dividend stocks. Costco's dividend yield is low (0.45%), but the payout ratio is 27.25%, indicating sustainability. However, the main profit here is likely from capital gains rather than dividends. Need to structure the answer with clear sections: Analysis, Entry/Exit Strategies, Hold Time, Risks, Conclusion. Use the references to back up each point, especially the financials, valuation, and technical indicators. Make sure to cite the references properly and include the visualizations as required. ``` **Should You Buy Costco Stock for Profit? A Comprehensive Analysis** Costco (COST) presents a compelling mix of **fundamental strength** and **technical signals**, but its valuation and market sentiment warrant careful consideration. Below is a structured analysis to guide your decision, including entry/exit strategies and hold time. --- ### **1. Fundamental Analysis: Strong Growth but High Valuation** - **Revenue & Profitability**: - Q2 2025 revenue reached **$63.72B** (+9.1% YoY), with net income of **$1.79B** and diluted EPS of **$4.02** . - Membership fee growth (+7.4% YoY) and e-commerce sales (+20.9% YoY) highlight operational resilience . - **Valuation**: - **P/E (TTM): 56.34** , significantly above the industry average (~20x), suggesting premium pricing. - **P/S (TTM): 1.76** and **P/B: 16.79** indicate overvaluation relative to book value. - **Dividend Potential**: - Dividend yield: **0.45%** (low compared to peers like TGT), but payout ratio is **27.25%** , signaling sustainability. |Ticker|Name|Date|Total Revenue YoY|Total Revenue|code|market_code| |---|---|---|---|---|---|---| |COST.O|Costco Wholesale|2023 Q4|9.499105297471251|7.8939E10|COST|185| |COST.O|Costco Wholesale|2024 Q1|6.1759465069713615|5.7799E10|COST|185| |COST.O|Costco Wholesale|2024 Q2|5.746752071798213|5.8442E10|COST|185| |COST.O|Costco Wholesale|2024 Q3|9.072099612287504|5.8515E10|COST|185| |Ticker|Name|Date|Net Income YoY|Net Income|code|market_code| |---|---|---|---|---|---|---| |COST.O|Costco Wholesale|2023 Q4|15.015974440894569|2.16E9|COST|185| |COST.O|Costco Wholesale|2024 Q1|16.49560117302053|1.589E9|COST|185| |COST.O|Costco Wholesale|2024 Q2|18.89495225102319|1.743E9|COST|185| |COST.O|Costco Wholesale|2024 Q3|29.10906298003072|1.681E9|COST|185| |Ticker|Name|Date|Diluted EPS YoY|Diluted EPS|code|market_code| |---|---|---|---|---|---|---| |COST.O|Costco Wholesale|2023 Q4|15.714285714285717|4.86|COST|185| |COST.O|Costco Wholesale|2024 Q1|16.612377850162872|3.58|COST|185| |COST.O|Costco Wholesale|2024 Q2|18.787878787878793|3.92|COST|185| |COST.O|Costco Wholesale|2024 Q3|29.010238907849818|3.78|COST|185| --- ### **2. Technical Analysis: Bearish Short-Term, Bullish Long-Term** - **Key Indicators**: - **MACD**: -19.15 (bearish) . - **RSI**: 21.7 (oversold) . - **Bollinger Bands**: Price ($972) below mid ($1,044.28) and upper ($1,091.41), with lower at **$997.16** . - **Moving Averages**: Price below MA10 ($1,031.93), MA20 ($1,044.28), and MA60 ($987.28) . - **Sentiment**: - **Average Price Target**: $1,050.1 , implying **~8% upside**. - **Analyst Consensus**: "Buy" , but technicals suggest near-term consolidation. |Ticker|Name|Date|RSI|KDJ|MACD|code|market_code| |---|---|---|---|---|---|---|---| |COST.O|Costco Wholesale|20250306|40.5358|31.1126|-10.7179|COST|185| |Ticker|Name|Date|Boll(Upper Value)|Boll(Lower Value)|Boll(Mid Value)|code|market_code| |---|---|---|---|---|---|---|---| |COST.O|Costco Wholesale|20250306|1078.8102|1018.0858|1048.4480|COST|185| |Ticker|Name|Date|Moving Average|code|market_code| |---|---|---|---|---|---| |COST.O|Costco Wholesale|20250306|1041.3400|COST|185| --- ### **3. Entry & Exit Strategies** #### **Entry Strategies**: 1. **Breakout Reversal**: - Wait for a sustained breakout above **$1,044.28** (MA20) with volume confirmation. 2. **Pullback to Support**: - Target entry near **$997.16** (Bollinger Band lower) if price tests this level. #### **Exit Strategies**: 1. **Price Target**: Sell at **$1,050** (average analyst target) . 2. **Technical Resistance**: - **$1,044.28** (MA20) and **$1,091.41** (Bollinger upper) are key resistance levels. 3. **Profit-Taking**: - Lock in gains if RSI exceeds **70** (overbought). --- ### **4. Hold Time & Risks** - **Hold Time**: - **6–12 months** to capitalize on earnings momentum and price target. - Short-term traders could aim for **3–6 months** with tighter stop-losses. - **Risks**: - **Valuation**: High P/E ratio leaves limited margin for error. - **Inflation**: Rising costs in fresh food and tariffs could pressure margins . - **Competition**: Direct threats from Amazon (AMZN) and Target (TGT) in e-commerce and retail. --- ### **5. Conclusion** Costco is a **long-term hold** for investors prioritizing fundamentals and dividend stability. However, its premium valuation and technical headwinds suggest waiting for a pullback to **$997–$1,000** before entry. For short-term traders, a breakout above **$1,044** could signal a bullish reversal. Monitor RSI and moving averages closely to time entry/exit. **Final Recommendation**: - **Buy**: On a pullback to **$997–$1,000** with confirmation of bullish momentum. - **Sell**: At **$1,050** (price target) or on technical breakdown below **$997**.