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Costco Wholesale Corporation (COST)

COST stock forecast: buy or sell

Close on Oct 23rd, 2020
$374.6 -0.31%
3 months performance
14.50%
Published: October 23rd, 2020 - 4.36pm EDT

COST stock outlook

  • Costco Wholesale stock just moved -0.31% to close at $374.60 on the stock market today, after 3 consecutive sessions in positive.

Important:
The viewpoints written in this post are personal and should not be followed as recommendations for you to buy or sell stocks. The author of this text does not have any knowledge of the particular scenarios of the reader, his or her finances or his or her own best interests at any given time. All users should speak with their financial advisor before buying or selling any securities Opinions are posted for learning motives only

COST stock charts

Should I buy Costco Wholesale stock?

All successful traders recommend adhering to a trading strategy and not make decisions based on subjective opinions, rumors or feelings. Trading strategies are meant for helping you in the decision process of what stocks to pick and when is the best moment to buy them. At Stocks2.com, we like to use very simple but trusted and powerful trend following trading strategies. Simple things usually work the best

Is $COST stock a buy?

In the current situation of Costco Wholesale there is just one buy setup eligible:

Uptrend buy setup

Costco Wholesale stock continues to trend higher since in mid-June and marked an amazing 27.76% gain. Price marked a pull back in this uptrend at $331.20 in mid-September, and since then it bounced up a 13.1%. Price just broke out above the entry point at $363.67, but it's still eligible. If price goes above $381.85, it would be better to wait to another pullback. If you decide to enter this trade, the suggested stop loss is at $327.30

Buy setupBuy pointStop lossRisk
Uptrend buy setup$363.67$327.3010%

Should I sell Costco Wholesale stock?

"To sell or not to sell", if you are holding Costco Wholesale shares?. Trading strategies let us to avoid rash decisions based on our personal feelings or the noise surrounding the market. When selling, as well as buying, our setups are very easy to follow but are only valid for selling shares you already own, not for selling short Costco Wholesale stock

A golden rule is that you should never hold a trade that shows a higher than expected losses at the time of the buy. The timing to sell your stock must always be ruled by the stop-loss (automatic or manual)

Is it time to sell Costco Wholesale stock?

Currently, Costco Wholesale stock doesn't match any of our preferred sell setups, so if you hold Costco Wholesale stock and your operation is in profit probably is not time to sell now

Analysts' recommendations to buy or sell Costco Wholesale stock

Brokerage firms and financial institutions post stock ratings based on their views of the market and the fundamental and technical situation of the analyzed stock. Unfortunately, the accuracy of these predictions is not very high, and certainly not a direct buy or sell signal

In the last 30 days, 13 analyst ratings were published for Costco Wholesale. General sentiment is bullish, with 7 out of 13 publishing positive forecasts

Costco Wholesale ratings

Brokerage firmRating
Sep 25th, 2020
BMO Capital Markets Buy
Sep 25th, 2020
Deutsche Bank Neutral
Sep 25th, 2020
MKM Partners Neutral
Sep 25th, 2020
Morgan Stanley Buy
Sep 25th, 2020
Raymond James Buy
Sep 25th, 2020
Royal Bank of Canada Buy
Sep 25th, 2020
Telsey Advisory Group Buy
Oct 6th, 2020
Barclays
Oct 6th, 2020
Credit Suisse Group Neutral
Oct 6th, 2020
CSFB Neutral
Oct 8th, 2020
Deutsche Bank Neutral
Oct 8th, 2020
Loop Capital Strong buy
Oct 15th, 2020
Jefferies Financial Group NeutralStrong buy

Technical analysis

Since in mid-June, Costco Wholesale has been drawing an uptrend that so far marked an amazing 27.76%. Rising peaks and troughs can be seen easily on a chart and how price action offered very few entry points on the breakouts. Latest low was in mid-September, when price bounced at $331.20. Costco Wholesale broke out above $363.67 (its last top) on October 8. That breakout was a good entry point

SMAs overview

A favorite tool of many traders are the moving averages, that easily show market direction. A moving average is the average price of a stock over a set period of time. Usual time periods used for moving averages are 21 days, 50 days, 100 days and 200 days. Further about Moving Averages from sources like Wikipedia and Investopedia

COST SMAs chart

Supports and resistances

Traders use support and resistance levels as a way to identify price points in the stock price action that may act as barriers, preventing the price of a stock to move in certain direction. Supports are levels where the price may find support as it falls. Price is more likely to "rebound" this level rather than break through it. However, if the price breaks down the support, it is likely to continue declining until approaching another support level. On the other side, resistances are where the price tends to find opposition as it rises. Again, this means that the price is more liable to "bounce off" at this level, and if it finally breaches this level, the price will rise more easily until it hits the next resistance

Price is at all-time highs and there are not upper resistance levels.

The current support levels are:

  • S1: $363.67 (-2.92% below)
  • S2: $331.20 (-11.59% below)
  • S3: $323.82 (-13.56% below)
  • Bollinger bands

    This is an indicator that was designed in the 1980s by John Bollinger. It comprises three lines that are superimposed on the price evolution chart:

    • The central band is a moving average, usually a simple moving average calculated with 20 periods
    • The upper band is calculated by adding to the value of the simple moving average 2 times the standard deviation of the moving average
    • The lower band is calculated by subtracting from the simple moving average 2 times the standard deviation of the moving average

    Since the price surpassed the upper band on October 13, the price has corrected downwards by 2.01%

    COST RSI chart

    Relative strength index

    The relative strength index (RSI) is a technical indicator used in the analysis of stock markets. Its objective is to map the current and past strength or weakness of a stock or market based on the closing prices of a recent trading period. Like other oscillation indicators, the RSI moves from 0% to 100%. The relative strength indicator is one of the best known and most widely used indicators, and it was invented by J. Welles Wilder in 1978

    The RSI dropped below the overbought level of 70 on Monday after just crossing to the overbough zone for just one day (weak signal). The RSI value today was 61.97. Costco Wholesale stock fell a 1.82% since RSI lost the overbought zone

    COST RSI chart

    Earnings and financials

    FQ4 investors call was hosted by Costco Wholesale ($COST) in late September after releasing the financial report. COST beat market estimates and posted an EPS of $3.04, that is a 7.04% surprise compared to the forecasts of $2.84.

    This compares to earnings of $1.89 per share same quarter last year, so posted EPS is a gain of 60.85%.

    COST ($COST) will host the Q1 earnings call next December. Wall Street expects an earnings a share of $1.96, compared to Q4 that was $3.04.

    COST revenues and profits chart