Anyone who reads my posts knows that I love Costco, but I wouldn't buy it at these levels. Their core business and financial fundamentals are doing just great.
Remember, there is ALWAYS a difference between a great company and a great stock. You NEVER want to confuse the two! Their historical price earnings (PE) is now almost 34. That is little rich for my taste. It usually trades in the high 20's. On the other hand, they are running a "ship shape" business model. Nice.
My only concern is that Jim Sinegal is retiring. For anyone who doesn't know him, he started and led the firm to its current success!
I look at it this way. When Sam Walton built Walmart, it was a moving and shaking retailer. Walmart essentially laid the gravestone for Sears who was, up until that time, the Big Kahuna of retail. Sadly, Sam Walton passed away. He was followed by David Glass and a number of other professional managers. Now Glass was immersed in Walmart's culture and worked for Walton, but after several generations of CEO's following Glass, performance languished. The great growth period had slipped away from Walmart.
We will probably see a similar change in Costco over time. I just hope it doesn’t happen anytime soon. The question is "Can the culture and company that Jim Sinegal built stand the test of time?"
That said, Costco is doing great as a company. I still love it!
