Below is a chart of Costco Wholesale Corp. (COST) from 1986 to 2019.
In the charts that follow, we break down the percentage change in each cyclical rise and decline of Costco. These cyclical changes put into perspective the current rise and help to gauge what to expect when the next cyclical decline arrives while suggesting there might be more room to the upside.
1986-1987 & 1987-1990
1990-1995
1995-2002
2002-2009
2009-2019
Cycle Data
Assessment
When looking at the data, it is easy to fall into the trap of believing that the average is where the price will go. In reality, the average may simply be a way-station, a point which the price will go through, or only come close to.
Looking at the average decline in the price of Costco from 1986 to the present, cycle lows were established after a decline of -40% or more. If the 1989-1990 decline of -44.67% were repeated then we could easily see Costco fall to $154.45 (from the current level of $279.14).
While not intended to tout the stock for the upside prospects, we cannot overlook the fact that Costco once rose as much as +853.00% in the 1995 to 2000 period. If Costco were to rise as much as +853% from the 2009 low, that would bring the price of the stock to $366.33.
We’re withholding our judgement on the upside prospects with a focus on obtaining the stock at undervalued prices. If the stock declines -40% or more, be ready to assess and possibly accumulate shares of Costco Wholesale.