Holding Patterns: Two Stocks (and a Sigh)

There’s a certain type of person who enjoys watching paint dry. I suspect they’re also the ones who buy high-priced stocks, convinced they’ve spotted some hidden value. Me? I tend to avoid anything that’s already shot up, because, frankly, the thought of missing “the boat” gives me a low-grade anxiety that manifests as an inexplicable urge to alphabetize my spice rack. It’s irrational, I know, but so is hoping a stock will double overnight. Still, sometimes you have to admit when something is, well, actually working. And two companies, Costco and Target, have been quietly, steadily doing just that.

As a portfolio manager, I’m supposed to be all cool-headed analysis and calculated risk. But let’s be honest: a little bit of inertia is involved. If a stock is already up, the easy thing is to just…leave it. It’s like finding a comfortable chair. But I’ve been doing this long enough to know that ignoring something simply because it’s already moved isn’t a strategy. It’s more of a personality quirk, really. And these two, despite their recent gains, still seem…reasonable. Not exactly bargains, but not teetering on the brink of absurdity either.

1. Costco

Costco’s stock has been doing rather well – up 13% this year, as of March 19th. Meanwhile, the S&P 500 was…not. It’s a bit like watching your neighbor’s garden flourish while your own is mostly weeds. It’s irritating, but you can’t deny the results. The genius of Costco, I think, is that it’s figured out how to make people want to buy in bulk. I mean, who needs five gallons of mayonnaise? Apparently, a lot of people. They pay an annual fee, and in return, they get access to a warehouse full of…stuff. It’s a simple concept, and it works. My aunt Mildred is obsessed. She once tried to explain the benefits of buying industrial-sized containers of pickles to me. It was a long conversation.

Renewal rates are consistently high – around 90% in their last quarter. They’ve also added members. It’s like a slightly unsettling cult, but with better prices on paper towels. Operating income was up 12.5% year-over-year. Which is good. Very good. The stock trades at a P/E ratio of 51, which is…high. But they’re opening 20 to 30 warehouses a year. It’s relentless. It’s exhausting just thinking about it. I suspect the valuation is justified. At least, that’s what I tell my clients. And myself, when I’m staring at the market data at 3 AM.

2. Target

Target used to be…different. They offered curated merchandise, exclusive designs. It was like a slightly more stylish version of everything else. Then, for a while, they seemed to lose their way. They started offering the same generic stuff as everyone else, and customers noticed. It’s like when a favorite restaurant changes its chef. You keep going back, hoping it will be like it used to be, but it never quite is.

The new CEO, Michael Fiddelke, seems to be trying to bring that differentiation back. He’s talking about improving stores, investing in technology. It’s a good plan, in theory. But plans are easy. Execution is hard. Same-store sales dropped 2.5% in the last quarter. Not great. But management is projecting a small increase this year. Optimistic, perhaps. But I appreciate the optimism. It’s a nice change from all the doom and gloom.

The stock is up 17.1% this year. Which is…surprising. I mean, they’re still in the middle of a turnaround. But investors seem to like the direction. The P/E ratio is 14, up from 12 at the end of last year. It’s still less than half the S&P 500’s ratio. Which is…attractive. If they can pull this off, if they can get back to being the Target we remember, this stock could have a lot of potential. It’s a gamble, sure. But sometimes, a little bit of risk is worth it.

So, there you have it. Two stocks that have already gone up, but still seem…reasonable. I’m not saying they’re guaranteed to make you rich. But they’re not likely to cause you a complete financial meltdown either. And in the current market, that’s a win in my book. Now, if you’ll excuse me, I need to go alphabetize my spice rack. It’s been bothering me all day.

2026-03-22 10:22

1. Costco

2. Target

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