Should You Consider Adding Costco Wholesale Corporation (COST) to Your Portfolio?

Rowan Street Capital, an investment management company, released its 2022 yearly update. A copy of the same can be downloaded here. The fund declined -61% in 2022, due to the decline of growth stocks in the year as the fund’s portfolio is dominated by growth companies. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.

Rowan Street Capital highlighted stocks like Costco Wholesale Corporation (NASDAQ:COST) in its Q4 2022 investor letter. Headquartered in Issaquah, Washington, Costco Wholesale Corporation (NASDAQ:COST) operates membership warehouses in multiple countries. On January 9, 2023, Costco Wholesale Corporation (NASDAQ:COST) stock closed at $481.40 per share. One-month return of Costco Wholesale Corporation (NASDAQ:COST) was -0.44%, and its shares lost 8.44% of their value over the last 52 weeks. Costco Wholesale Corporation (NASDAQ:COST) has a market capitalization of $213.611 billion.

Rowan Street Capital made the following comment about Costco Wholesale Corporation (NASDAQ:COST) in its Q4 2022 investor letter:

“Let’s look at Costco Wholesale Corporation (NASDAQ:COST). Its dividend yield is 0.8%. Earnings over the next 3-5 years are forecasted to grow at ~10%. The current P/E multiple is a very pricey 34x for such growth rate. Now, Costco is an outstanding business with consistent profits and cash flows. However, the price that you pay is important (and you tend to pay a very high price for a “cheery consensus”) and if the earnings multiple comes down to say 30x, you internal rate of return (IRR) over the next 4-5 years will be around 6-7% from holding Costco’s stock. Its a decent market-like return, but nothing to be excited about (only a few percentage points over risk-free rate).”

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Costco Wholesale Corporation (NASDAQ:COST) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 69 hedge fund portfolios held Costco Wholesale Corporation (NASDAQ:COST) at the end of the third quarter, which was 64 in the previous quarter.

We discussed Costco Wholesale Corporation (NASDAQ:COST) in another article and shared the list of best stocks to buy before the 2023 recession. In addition, please check out our hedge fund investor letters Q4 2022 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.