Costco's stock performance has been unimpressive lately, but now could be a good time to buy shares.Many stocks have soared recently, largely driven by enthusiasm in the tech sector for emerging artificial intelligence (AI) companies. But some areas of the market have been under pressure, and even some growth stocks are seeing their share prices retreat.One such growth company whose share price is flailing right now is Costco Wholesale (COST +0.58%). The giant membership-based retailer has seen its share pr ...

Core Viewpoint - Morgan Stanley has reduced its price target on CarMax shares but still sees potential for upside despite the competitive pressure from Carvana [1] Company Summary - CarMax's shares have been downgraded by Morgan Stanley, indicating a cautious outlook on the company's stock performance [1] - Despite the price target cut, Morgan Stanley believes that CarMax has opportunities for growth in the market [1] Industry Summary - The used car market is experiencing increased competition, particularly from Carvana, which poses challenges for CarMax [1] - The competitive landscape is evolving, and companies in the used car sector must adapt to maintain market share [1]

Core Insights - The article expresses a positive outlook on ALV shares, indicating a beneficial long position held by the analyst [1]. Group 1 - The analyst emphasizes the importance of conducting personal research before making investment decisions, highlighting the inherent risks involved in investing [2]. - It is noted that past performance does not guarantee future results, suggesting a cautious approach to investment evaluations [3].

Core Viewpoint - American Express is considered a reliable long-term investment, particularly within Berkshire Hathaway's portfolio, which is closely monitored by investors due to Warren Buffett's endorsement [1][2][4]. Company Overview - American Express accounts for 15.9% of Berkshire Hathaway's portfolio, making it the second largest holding after Apple, with Berkshire owning 21.6% of the company [2]. - The company has not bought or sold shares since 2012, indicating a stable investment strategy [4]. Business Model - Unlike Visa and Mastercard, American Express operates as both a card issuer and a bank, which allows it to target lower-risk, higher-income consumers [5][6]. - This exclusivity limits growth but reduces credit risk and enhances its status as a premium brand [6]. Financial Performance - As of the end of 2024, only 0.8% of American Express' consumer and small business loans were delinquent by more than 30 days, a decrease from 1% at the end of 2023 [7]. - The company allocated only 8% of its total revenue to credit loss provisions in 2024, indicating strong financial health [7]. Economic Resilience - American Express is better insulated from inflation and interest rate fluctuations compared to its competitors, benefiting from higher net interest income during rising rates [8]. - The company has demonstrated stable growth rates, with revenue and diluted EPS growing at CAGRs of 7% and 10% from 2014 to 2024 [9]. Future Growth Prospects - Analysts project revenue and diluted EPS growth at CAGRs of 8% and 12% from 2024 to 2027, driven by increased spending among affluent customers and expansion of travel-related services [10]. Valuation - Despite a 290% stock price increase over the past decade, American Express is valued at 20 times next year's earnings, which is lower than Visa and Mastercard [11].

Core Viewpoint - Costco Wholesale has significantly outperformed the broader market, with a 200% increase in stock price over the last five years, doubling the S&P 500's return during the same period [1] Group 1: Sales Growth and Opportunities - Costco's sales have accelerated post-pandemic, with annualized revenue growth of about 11% from fiscal 2019 to fiscal 2024, compared to 8% from fiscal 2010 to 2019 [2] - The company has substantial growth opportunities in e-commerce and non-food sales, with e-commerce sales increasing nearly 16% year over year last quarter [6][7] - Costco's competitive advantage lies in its membership model, with nearly 80 million paying households, allowing it to offer low prices and continue expanding [4] Group 2: Expansion Plans - As of the recent quarter, Costco operates 914 warehouses globally, with plans to open 24 new locations in high-quality markets such as Sweden, Japan, South Korea, and Canada [5] - The company is experiencing double-digit sales growth in various non-food categories, including jewelry, toys, and home goods, indicating strong demand for diverse product offerings [8] Group 3: Valuation Concerns - Costco's stock trades at a high earnings multiple of 54 times forward earnings, significantly above the S&P 500's forward P/E ratio of 26 [9] - The current P/E ratio is also above Costco's five-year average of 44, raising concerns about the sustainability of such a high valuation given the slowing sales momentum in e-commerce and non-food sales [10][11] - Analysts expect long-term earnings growth at an annualized rate of 9%, which may not justify the current high P/E, potentially leading to disappointing returns for investors [11][12]

Core Viewpoint - Moody's Corporation (NYSE: MCO) is recommended as a buy due to its strong competitive moat and pricing power, indicating a positive outlook for both of its business segments [1]. Group 1: Investment Thesis - The investment approach focuses on understanding core business economics, including competitive moat, unit economics, reinvestment opportunities, and management quality, which are essential for long-term free cash flow generation and shareholder value creation [1]. - The analyst emphasizes a fundamental, valuation-driven investment strategy, particularly in sectors with strong secular tailwinds [1]. Group 2: Analyst Background - The analyst has 10 years of experience in investment banking and is currently managing personal funds, which were seeded from friends and family [1]. - The motivation for sharing insights on Seeking Alpha is to provide valuable investment analysis and receive feedback from other investors [1].