And it could be setting up for more highs soon. One likely reason is due to Big Money lifting the stock.
So, what’s Big Money? That’s when a stock goes up in price alongside chunky volumes. It’s indicative of institutions betting on the shares.
Smart money managers are always looking for the next hot stock. And Costco has many fundamental qualities that are attractive.
This sets up well for the stock going forward. But how the stock is trading points to more upside. As I’ll show you, the Big Money has been consistent in the shares the last year.
You see, fund managers are always looking to bet on the next outlier stocks…the best in class. They spend countless hours sizing up companies, reading reports, speaking to analysts…you name it. When they find a company firing on all cylinders, they pounce in a big way.
That’s why I’ve learned how critical it is to gauge Big Money demand for shares. To show you what I mean, have a look at all of the big money signals COST has made the last year.
The last few days has seen Big Money activity, too. Each green bar signals big trading volumes as the stock ramped in price. Red signals are showing big selling in the shares:
In 2021, the stock has steadily gained. Year to date, COST made 7 of these rare green signals. These came after a big selloff earlier this year when growth stocks were under pressure. Generally speaking, recent green bars could mean more upside is ahead.
Now, let’s check out technical action grabbing my attention:
- YTD outperformance vs. staples ETF (+4.12% vs. XLP)
Outperformance is huge for leading stocks.
Next, it’s a good idea to check under the hood. Meaning, I want to make sure the fundamental story is strong too. As you can see, Costco has been growing revenues and earnings rapidly. Take a look:
- 3-year sales growth rate (+8.93%)
- 3-year earnings growth rate (+14.04%)
Marrying great fundamentals with technically superior stocks is a winning recipe over the long-term.
In fact, Costco has been a top-rated stock at my research firm, MAPsignals, dozens of times the last few years. That means the stock has buy pressure, strong technicals, and growing fundamentals. We have a ranking process that showcases stocks like this on a weekly basis.
COST has been a Big Money favorite since 1991 (live and backtested data). And since it last appeared on this report back on 1/12/2016, it’s up 199%. The blue bars below are the times that Costco was a top pick:
I wouldn’t be surprised if COST makes additional appearances in the years to come. Let’s tie this all together.
Costco continues to fire on all cylinders technically alongside growing sales and earnings. I like the long-term story of the stock.
The Bottom Line
The Costco rally could have further to go. Big money buying in the shares is signaling to take notice. Shares could be positioned for further upside. Given the historical gains in share price and strong fundamentals, this stock could be worth a spot in a growth-oriented portfolio.
Disclosure: the author holds long positions in COST in personal and managed accounts at the time of publication.
Learn more about the MAPsignals process here.
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