The valuation warning for Costco and other higher-rated stocks

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Financial Times 13h ago

The valuation warning for Costco and other higher-rated stocks - Financial Times

Quick Summary:

While many investors appreciate the many merits of Costco’s unique business model with profitability underpinned by fees to use the warehouse club, this strikes me as a lofty increase in valuation for a mature company founded in 1983.

We evaluated the precedents of businesses that trade at 50 times price-to-forecast earnings or higher for the first time in a rolling three year period going back to 1999.

One important stock in the semiconductor industry Advanced Micro Devices was first valued above the 50 times forecast earnings mark in February 2024.