Costco Wholesale Corporation : One could take advantage of the market's hesitation

12/07/2022 | 02:47am EST

long trade Live

Entry price : 479.09$ | Target : 560$ | Stop-loss : 440$ | Potential : 16.89%

Costco Wholesale Corporation shares have been fluctuating horizontalally for several weeks. As the share price approaches the lower bounds, a buying opportunity could arise. Investors have an opportunity to buy the stock and target the $ 560.

Summary

• The company has strong fundamentals. More than 70% of companies have a lower mix of growth, profitability, debt and visibility.
• The company presents an interesting fundamental situation from a short-term investment perspective.
• The company's Refinitiv ESG score, based on a ranking of the company relative to its industry, comes out particularly well.

Strengths

• With regards to fundamentals, the enterprise value to sales ratio is at 0.84 for the current period. Therefore, the company is undervalued.
• Analysts covering this company mostly recommend stock overweighting or purchase.
• Over the past twelve months, analysts' opinions have been strongly revised upwards.
• Considering the small differences between the analysts' various estimates, the group's business visibility is good.
• The group usually releases upbeat results with huge surprise rates.

Weaknesses

• The company's profitability before interest, taxes, depreciation and amortization characterizes fragile margins.
• The company does not generate enough profits, which is an alarming weak point.
• With an expected P/E ratio at 32.85 and 29.68 respectively for both the current and next fiscal years, the company operates with high earnings multiples.
• The company appears highly valued given the size of its balance sheet.
• The company is highly valued given the cash flows generated by its activity.
• The firm pays small or no dividend to shareholders. For that reason, it is not a yield company.

Ratings chart

Subsector Other Discount Stores

1st jan. Capitalization (M$) Investor Rating COSTCO WHOLESALE CORPORATIO.. 12.77% 228 432 TARGET CORPORATION 21.46% 81 364 WAL-MART DE MÉXICO, S.A.B. .. 9.27% 67 534 DOLLAR GENERAL CORPORATION -6.07% 50 995 DOLLARAMA INC. 0.08% 16 953 SIAM MAKRO 3.75% 13 150 PAN PACIFIC INTERNATIONAL H.. -4.04% 10 724 BJ'S WHOLESALE CLUB HOLDING.. 9.55% 9 744 B&M EUROPEAN VALUE RETAIL S.. 19.99% 5 980 PEPCO GROUP N.V. 9.72% 5 742 OLLIE'S BARGAIN OUTLET HOLD.. 19.88% 3 495

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