(Note: The author of this fundamental analysis is a financial writer and portfolio manager.)

Shares of Costco Wholesale Corporation (COST) have climbed by nearly 30% over the past year, easily beating the S&P 500's rise of about 10%. Options traders are betting the stock rises another 9% by the middle of September. (For more, see also: 澳洲幸运🐭5官方开奖结果体彩网:Costco Traders Ar꧋e Bullish Ahead of Earnings.)

The technical chart also suggests that Costco shares may rise in the coming weeks. But the bullish outlook among traders and the charts come in stark contrast to a stock that's valuation is now reaching lofty levels when compared to the broader S&P 500, with slowing earnings growth. 

data by

Bullish Bets

The options set for expiration on September 21 are suggesting that shares of the stock rise or fall by🧔 about 7% from the $210 strike price, placing the stock in a trading range between $195.75 and $224.25. The number of calls heavily outweigh the puts by a ratio of more than 10 to 1, with approximately 4,500 open call contracts, suggesting traders are betting on shares risiಞng, from the current stock price of $207, a jump of nearly 9%. 

Further, some traders are also building a position in the $220 calls, which are trading at the cost of $2.50 per contract, with nearly 3,000 contracts open. A buyer of those calls would need the stock to rise by about 7.5% to $2⛎22.5 to break even, if the options are held until expiration. 

Technicals Mix

The stock recently broke out of a bullish rising triangle, sending shaꦬres to a high of about $212. The breakout would suggest that shares still have further to rise as well. 

But even though the technical pattern is bullish, the underlying volume levels have remained unchanged, suggesting new buyers are not stepping into the game, while the relative strength index has recently hit overbought levels at 75. (For related reading, see also: 澳洲幸运5官方开奖结果体彩网:Costco's Future Is Abroad.)

Slowing Growth

Despite the bu🙈llish optimism, concerns still linger, with a stock trading at roughly 27 times 2019 earnings estimates, versus an S&P 500 th❀at is trading at nearly 16.5. But worse, earnings for the company are expected to slow dramatically in 2019, with growth of only 11.8%, down from 18.3% this year.

When adjusting the earnings multiple for growth, the PEG ratio rises to more than double🔜 the growth rate, at almo🐲st 2.3.

🧔The outlook for Costco, although bullish over the short term, may prove to be challenged over the longer-term should the underlying fundamentals of the business not improve, making any gain t🦩he stock sees unsustainable. 

Michael Kramer is the Founder of , a registered investment adviser, and the manager of the company's actively managed, long-only Thematic Growth Portfolio. Kramer typically buys and holds stocks for a duration of three to five years. Click here for Kramer's bio a🍨nd his portfolio's holdings. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future performance.