Will Costco Stock See Higher Levels After 7% Rise In A Month?

by Trefis Team
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Costco stock (NASDAQ: COST), a warehouse club operator, experienced around a 7% rise over the last month (twenty-one trading days) to levels of near $424 currently. But will COST’s stock see higher levels over the coming weeks, or is a further decline in the stock imminent?

According to the Trefis Machine Learning Engine, which identifies trends in a company’s historical stock price, returns for COST stock average 1.2% in the next one-month (twenty-one trading days) period after experiencing a 1.9% gain in a week. But how would these numbers change if you are interested in holding COST stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test COST stock chances of a rise after a rise. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!

MACHINE LEARNING ENGINE – try it yourself:

IF COST stock moved by -5% over five trading days, THEN over the next twenty-one trading days, COST stock moves an average of 2.9%, with a 74% probability of a positive return over this period.

Some Fun Scenarios, FAQs & Making Sense of COST Stock Movements:

Question 1: Is the average return for COST stock higher after a drop?

Answer: Consider two situations,

Case 1: COST stock drops by -5% or more in a week

Case 2: COST stock rises by 5% or more in a week

Is the average return for COST stock higher over the subsequent month after Case 1 or Case 2?

COST stock fares better after Case 1, with an average return of 2.9% over the next month (twenty-one trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of -0.1% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next twenty-one trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how COST stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer: If you buy and hold COST stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For COST stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

You can try the engine to see what this table looks like for COST after a larger loss over the last week, month, or quarter.

Question 3: What about the average return after a rise if you wait for a while?

Answer: The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks – although COST stock appears to be an exception to this general observation.

COST’s returns over the next N days after a 5% change over the last five trading days are detailed in the table below, along with the returns for the S&P500:

It’s pretty powerful to test the trend for yourself for COST stock by changing the inputs in the charts above.

It is helpful to see how its peers stack up. Check out COST Stock Comparison With Peers to see how Costco compares against peers on metrics that matter.

See all Trefis Price Estimates and Download Trefis Data here

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