COST Stock Price: Costco Wholesale Corporation, may provide a “buy the dip” opportunity
|- Costco's shares have shown resilience beyond the initial wave of stockpiling.
- A potential stock market dive may weigh on the equity.
- That would potentially provide an opportunity to stock up.
Stocks of Costco Wholesale Corporation, the membership-based warehouse club, has had its share of gyrations around the coronavirus crisis. NASDAQ:COST hit a high of just above $325 as Americans began stockpiling for the shelter-in-place orders and then plunged to around $280 when fears of a financial crisis gripped markets.
However, compared to broader markets, Costco's shares traded at a relatively narrow range. After a rally in April, broader US equity markets are declining again – following the "Sell in May and go away" adage. At the time of writing, COST is trading just above $300, around the middle of that range.
The gradual decline may accelerate as traders fear a catastrophic job report. Economists expect Non-Farm Payrolls to show a whopping loss of around 20 million American jobs and leap of the Unemployment Rate well above 10%. Concerns may grow as the week progresses, and data such as the ADP private-sector labor report and the ISM Non-Manufacturing Purchasing Managers' Index are both published.
Costco will likely be unable to escape a broad sell-off, and for the logical reason that fewer people in the workforce mean less disposable income available for shopping.
Nevertheless, the past resilience of Costco's shares mean they can bounce once again – a classic "buy the dip" opportunity. Moreover, its members will likely remain loyal and take advantage of the big quantities it sells. The lockdowns may have contributed to growing loyalty. Besides, as some restaurants will never return and with lower household budgets, people could continue eating at home.
All in all, Costco seems well-positioned to weather a potential upcoming sell-off.
Costco stock price
Costco Wholesale Corporation shares have created a triple bottom at $280, which remains critical support. Above that, the round level of $300 is of psychological significance but not technically relevant. Looking up, the recent high of $308 is a stepping stone ahead of $325.
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