Shares of Costco Wholesale (COST) have been under pressure since Amazon.com Inc. (AMZN) announced its $13.7 billion acquisition of Whole Foods Market (WFM) . However, after positive comp-store sales reports and a fit of selling, shares of Costco have been on the mend.
Up about 10% from its August lows, investors are wondering if there could be more left in the tank when the company reports fiscal fourth-quarter earnings on Thursday after the close. It wouldn't be surprising to see Costco report fabulous results, but still see its stock sell off, TheStreet's Jim Cramer said from the floor of the New York Stock Exchange Wednesday.
Amazon has been pressuring the company's operations, although the tie-up with Whole Foods has not likely had an impact yet. Management could address this new dynamic on the conference call, but investors shouldn't bank on it, Cramer reasoned.
Shares have moved up a good deal from its recent lows and that could cause profit taking from short-term investors, even if the results are really good, said Cramer, who also manages the Action Alerts PLUS charitable trust portfolio. Investors saw similar action in shares of Home Depot (HD) earlier this summer.
You could easily make the case for Costco being a great company and deserving to go higher. But that may not be the case because of profit-taking, he concluded.
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