2 Stocks to Avoid (and 1 to Buy) -- The Motley Fool
Costco stock certainly deserves a premium based on the quality of the company, but I think we've reached the point where that premium is excessive. This doesn't mean that the stock price is going to collapse, but I suspect that returns from here will be depressed. Costco stock soared 81% over the past five years. Given the current valuation, I suspect that the next five years won't be nearly as impressive.
Beyond valuation, Costco has been extremely slow to embrace e-commerce. This hasn't been much of a problem thus far, as the warehouse club model protects the company to a degree from online retailers. But Costco is going to eventually need to embrace e-commerce and make it work with its fleet of stores. Combine this long-term uncertainty around e-commerce with an inflated valuation and you get a retail stock that doesn't look like a great investment.
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