Ahead of Earnings – A Look at Costco

The holiday season is upon us and retail stocks are in play.  But we’ve already seen that high-end stores – such as Tiffany – are getting pummeled by poor outlooks.  The discount store is in vogue and Costco Wholesale Corp. (NASDAQ:COST) fits the bill.

COST reports earnings around December 8, with analysts expecting a modest 11% increase in profits from a year ago.  That’s along the lines of recent growth rates, so expectations appear modest.  The stock usually does well after earnings, so we’re looking for a bump above the expected holiday surge (last December the stock gained 6.8%).

The shares are currently rebounding off their 100-day moving average, which defined the November low.  Today’s gain of more than 2% pushed the shares to 85.30, an all-time high close.  There is some history of resistance around 85, so watch for that in the next few days.  But a break above leaves a wide-open field to run higher.

Analysts are split on COST, with just half rating the stock a “buy.”  Given COST’s premier position toward the lower end of the retail scale, the stock could see some upgrades.  All in all, December should be kind to COST.