Two enterprises, both polished and prosperous, yet one wears its wealth with greater restraint. Visa (V) and Costco Wholesale (COST) stand as exemplars of modern commerce, their trajectories marked by growth, yet their valuations whisper of divergent philosophies. To invest is to choose between a well-tied cravat and a velvet glove-both elegant, but one more judiciously applied.
Growth is the name of the game
Visa’s third-quarter fiscal 2025 results, a crescendo of 14% revenue growth and 23% adjusted earnings, echo the inevitability of progress. Yet, as with all things, the true measure lies not in a single quarter but in the enduring trends. The digital age, like a well-dressed gentleman, is here to stay, and Visa, as its trusted valet, continues to facilitate transactions with unflappable grace.
Costco, meanwhile, reports a robust 8% top-line expansion and 5.7% same-store sales growth, its membership model a relic of fiscal prudence. A yearly fee, like a well-kept secret, ensures steady income, allowing the retailer to embrace lower margins with the confidence of a man who knows his worth.
Two good businesses, but one is a better value
Wall Street, ever the critic, has not overlooked these tales of triumph. Yet, as Benjamin Graham once mused, even a paragon may falter if its price exceeds its merit. To pay too much for a great company is the height of imprudence, for even the finest silk may be a shroud if the price is too steep.
Costco’s stock, a testament to its current allure, hovers near its historical zenith. Its price-to-sales ratio, 1.6 versus a five-year average of 1.1, suggests a man who has overindulged in the wine of success. The P/E ratio, 55 against a 43 average, and a P/B of 16 versus 12, all speak of a valuation as ostentatious as a peacock’s plumage.
Visa, by contrast, wears its price with the poise of a dandy. Its P/S of 16.3, P/E of 32, and P/B of 17, though not modest, appear more measured. Its dividend yield, a mere 0.7%, is a whisper of generosity, while Costco’s 0.6% is a sigh of austerity.
To label Visa cheap is to misunderstand its nature, but to call it reasonably priced is to speak truth with a smile. For the growth investor, the choice is clear: Visa, the well-mannered guest, or Costco, the overenthusiastic host.
There’s nothing wrong with growth, but you still need to consider valuation
To chase growth without regard for price is to dance in the rain without an umbrella. Wall Street, ever the optimist, often prices future glory into present shares, a habit as perilous as it is common. The true investor, like a connoisseur of fine wine, seeks growth at a price that does not offend the palate.
Thus, in the grand theater of finance, Visa plays the role of the well-dressed gentleman, while Costco, though charming, is the one who has overindulged in the wine. Choose wisely, dear reader, for even the most promising stock may be a folly if the price is too high.
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2025-08-10 12:23