1. Bloomstran highlights Costco’s 19.7% annual growth over a 21¾-year holding period. 2. He regrets selling Costco shares, calling those sales monumental errors in hindsight. 3. Costco’s P/E jumped from 18.7 to 56.9 despite a low 2.9% profit margin. 4. He outlines five‐year scenarios with returns ranging from a -2.4% loss to a 5.6% gain.
Bloomstran’s analysis praises Costco’s historical compound growth but warns that its current high P/E relative to modest margins may correct over time. Past examples (e.g., valuation adjustments in other large retail stocks) suggest investors should remain cautious amid overvaluation.
The article provides a detailed, qualitative analysis of Costco’s valuation relative to historical performance. Its insights, while cautionary, influence long-term investor expectations and are relevant compared to other high-priced stocks.
The five-year scenarios and the expectation that market rationality will eventually prevail indicate a long-term impact on Costco's valuation.