Conclusion, Investment Implications, Strategy
Costco’s (COST) recent rise from months of sideways indecision suggests its larger 2019 advance has resumed and targetd an additional 15% rise to $372.25 per share.
Analysis and Rationale
Costco Wholesale Corporation (COST), together with its subsidiaries, operates membership warehouses in the United States, Puerto Rico, Canada, the United Kingdom, Mexico, Japan, Korea, Australia, Spain, France, Iceland, China, and Taiwan. It offers branded and private-label products in a range of merchandise categories. As of September 1, 2019, the company operated 782 warehouses, including 543 in the United States and Puerto Rico, 100 in Canada, 39 in Mexico, 29 in the United Kingdom, 26 in Japan, 16 in South Korea, 13 in Taiwan, 11 in Australia, 2 in Spain, 1 in Iceland, 1 in France, and 1 in China. It also operates e-commerce Websites in the United States, Canada, the United Kingdom, Mexico, South Korea, and Taiwan. The company was formerly known as Costco Companies, Inc. and changed its name to Costco Wholesale Corporation in August 1999. Costco Wholesale Corporation was founded in 1976 and is based in Issaquah, Washington.
Chart 1 below plots COST daily since late 2018. The colored highlights point out that COST has recently risen from 4 months of sideways indecision (blue), indicating its larger 2019 advance is resuming. A sustained rise above the upper boundary of the indecision area, currently near $318.00, would help confirm this and target an additional 15% rise to $372.25 per share (green).
Chart 1
Table 1 below shows, considering the aforementioned upside target and a protective stop placed below the $318.05 area, a long entry price of $324.55 would provide a 1:7.3 risk/reward ratio (risking $1.00 to make $7.3) with an initial risk of 2.0%.
Table 1
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