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Non-Tech : Costco, slow but sure?
COST 924.85+1.0%Jan 9 9:30 AM EST
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To: Bill Wexler who wrote (726)9/26/1998 2:01:00 PM
From: Zakrosian   of 1147
 
Bill - Thanks for an excellent overview of why Costco is a great long term investment. However, I think you might be overlooking the fact that a lot of folks playing the stock market (myself included) are also short term traders. Consequently, we look at the prospects for the stock over the next couple quarters rather than the next 5 years.

As an example, I first bought COST a couple years ago around 16 after I went in to buy one of their great pies and almost picked up a chainsaw while I was there. I had no doubt that this was a company with a tremendous potential for growth and owning the stock made looking for a parking spot and standing in line for 20 minutes to spend yet another $100 a pleasure.

Now the stock is trading at about 25 times earnings and it seems fairly valued, though I have no doubt that in 3 years it will reach 100 a share. But for a portion of my portfolio, I ask myself the question: which scenario is more likely - that COST will hit 100 over the next 6 months or that PIR will hit 16 (at which point it will be trading at about 20x earnings)?

Because I think the latter is more likely, I've sold 2/3 of my COST to buy PIR, and if I'm right, I'll reverse the process sometime next year.

Again, I couldn't agree more with you about the company. Where I live there is a BJ's within a mile of the Costco. About 90% of my friends who shop either go to Costco and those who go to BJ's do so primarily because it's not as crowded. Like you say, COST is a no-brainer from a long term perspective.
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