The market has been choppy in 2022, dragging the S&P 500 (^GSPC 0.41%) more than 8% lower so far. However, some individual stocks are reaching record highs even now. Handling some of those winners may take a bit of patience and time, allowing their overheated stocks to cool down a bit before you take action.

On that note, let me show you why you should buy Costco Wholesale (COST 0.49%) and Limelight Networks (EGIO) on the dips.

A person holding a chalk stands next to a large chalkboard, where a sputtering rocket ship is drawn.

That rocket fuel looks expensive. Image source: Getty Images.

Costco: An all-time great racing to new heights

Warehouse retailer Costco has been crushing the market for years. The difference is even clearer when you include dividend payouts in the calculation. Costco has a history of sharing its excess cash profits with shareholders in the form of special dividends. That history includes a $10 payout per share in 2020 and $7 per share in 2017, on top of a steadily growing quarterly dividend. On that basis, Costco has more than tripled the broader market's returns over the last decade:

COST Total Return Level Chart

COST Total Return Level data by YCharts

These price gains were built on a solid foundation of successful business results, of course. Costco's unique business model of razor-thin margins on the retail goods plus an incredibly lucrative membership program turned out to be a fantastic long-term cash machine. That's where the generous special dividends come from.

However, Costco's investors are getting a bit too excited these days. It's no problem that the stock trades near its all-time highs, because nudging that barrier is how you build positive returns over the long haul. But Costco's stock is rising even faster than its cash profits in recent years, which makes the latest highs look less sustainable.

Costco's stock is a great buy at nearly any price, but patient investors should hold their horses here. Of course, you can always build your holdings by small amounts; keep an eye out for temporary price drops before adding large sums of new capital.

Limelight: A powerful turnaround story

Content delivery network veteran Limelight is a different story. This stock isn't exploring all-time highs today, but bouncing back from a deep plunge in 2021.

As a shareholder myself, I think it's nice to see the stock making a comeback. The company is under new management, whose updated business plan is making a difference. At the same time, the stock is running too far, too fast. Prices have more than doubled from last summer's lows:

LLNW Chart

LLNW data by YCharts

That would be fine if the business were firing on all cylinders, but that's not the case so far. In 2021, top-line revenue fell 5% while operating costs increased. Net losses nearly tripled year over year and free cash flow was printed in a deep shade of red. Limelight shares are trading at 440 times forward earnings estimates and the company has no profits of any kind to show from the last four quarters.

Limelight is in the process of acquiring the Edgecast content delivery business from Yahoo! in a $300 million deal that promises to boost Limelight's edge computing and security solutions. But that stock-swap buyout will also dilute existing holdings by increasing the share count by roughly 40%, and I can't recommend buying into this stock right now.

Again, I am a shareholder and I do believe in Limelight in the long run. This just isn't a good time to get into the stock. Hold your horses and wait for the next dip.