Can Continued Growth Fuel Costco Wholesale Corporation (NASDAQ:COST) To Reach New Levels?

Costco Wholesale Corporation (NASDAQ:COST) shares have been experiencing accelerated earnings and sales growth over the past five years.  Over that time frame the firm has seen earnings growth of 9.00% and sales growth of 6.10%.

Investors are constantly looking for ways to find success in the stock market. Figuring out what stocks to buy can be tough. With so many different names to choose from, the task can seem quite overwhelming at times. Many investors will opt to go with a mix of growth and value stocks. Investors looking to capitalize on shorter-term price movements may have a completely different game plan than those who are looking to fin stocks to hold onto for the longer-term. Finding quality stocks that match the individual’s criteria may take a lot of effort and dedication, but it may be well worth it for the long-term success of the portfolio.    

While the firm has enjoyed the upward movement, it’s important to look at analyst expectations and where the company is headed from here.  On a consensus basis, analysts are projecting EPS growth of 8.92% for next year and have a $236.83 one year price target on the stock.   The stock recently traded at $210.94.

 Six Fundamental Characteristics of Great Growth Stocks

#6 Huge Mass Markets – The more potential customers there are, the greater the possibility that both the company, and the investment in said company, will be a success. 

#5 Market Dominance/Barriers to Entry – Look for companies who hold patents.  This is great barrier to entry, ensuring no competition.  Look for companies who dominate the market, blowing away the competition, though market dominance can be harder to measure. 

#4 Accelerating Earnings Growth – If a company’s earnings growth rate increases for two consecutive quarters, their growth is accelerating.  Faster growth is better growth, and a company whose earnings growth rate is accelerating is an attractive investment.

#3 Triple-Digit Revenue Growth – Companies growing their revenues at triple-digit rates (100% or better) are usually smaller and less known, making them attractive for buying by institutions. 

#2 High Profit Margins – In recent decades, high-margin stocks have beaten low-margin stocks by a huge amount. 

#1 Top Notch, Innovative Management – All great managers who led their companies to success usually did so by thinking differently.  There is no surefire and quick measurement of management talent.  When you find a top manager, one with a record of prior success and accolades, you should strike.  Top managers usually find a way to overcome obstacles. 

Let’s take a look at how the stock has been performing recently.  Over the past twelve months, Costco Wholesale Corporation (NASDAQ:COST)‘s stock was 3.24%.  Over the last week of the month, it was -0.98%, -7.11% over the last quarter, and  -4.25% for the past six months. 

Costco Wholesale Corporation (NASDAQ:COST)’s EPS is 7.42.  Last year, their EPS growth was 17.50% while their EPS growth over the past five years is 9.00%.  Analysts are predicting Costco Wholesale Corporation’s stock to grow 8.92% over the next year and 11.12% over the next five.

New traders may face many challenges when entering the stock market. One of the bigger challenges involves not repeating mistakes. As with any new endeavor, there will be a learning curve. Paying attention to historical trades can help the trader figure out where they might have gone astray. Repeating the same mistakes over and over again can lead to the demise of the trader’s confidence and hard earned money. Traders who are able to move forward and learn from previous errors may find themselves making much better decisions in the future.

Receive News & Ratings Via Email - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings with MarketBeat.com's FREE daily email newsletter.