If everything counts in large amounts, Costco
The stock has surrendered roughly 40% of its value after peaking three years ago, and back in October the company closed out fiscal 2003 with an earnings drop. The shares that proved to be Wall Street darlings through the 1990s have a had a rough go on this side of the millennium, though it bears noting that the stock has actually risen slightly over the past year.
The market's markdown since its all-time high has been more a matter of valuation than that of faulty fundamentals. After all, Costco continues to expand and same-store-sales are generally buoyant.
Three years ago, I argued that Costco wasn't worth 40 times earnings -- as it was trading at the time. "Realize that a quality, maturing company is worth a realistic multiple as it enters the golden years," I wrote. "Realistic is not what Costco is fetching right now."
However, today's multiple of just 21 times this year's earnings is clearly more reasonable. It's not only that rivals BJ's Wholesale Club
Besides, it could be worse. Costco could be Kroger
So, while Costco may not be exactly ripened at this point, at least it's not selling past its expiration date.
Tom Gardner recommended Costco in the May 2002 issue of Motley Fool Stock Advisor .
Where will Costco go from here? Is it overvalued, undervalued, or just right at today's prices? All this and more -- in the Costco discussion board. Only on Fool.com.