Next up, we have Costco, which is position number nine in my portfolio. It's also one of my longest held positions in my entire portfolio. I basically started buying Costco day one when I started investing.
I didn't know as much back then, but I knew Costco is a really good company. And the investment test turned out on a compounded growth rate. Costco has been one of the best returning stocks in the market.
But it currently sits at an $83,000 position with 50,000 of that being gains. This one here is a little bit tricky because Costco currently trades at 9 and $69 per share, but the buy target that I have for this one is all the way down.
It's way down. It's down at $600 per share. Now, with most of my companies, my buy targets around 18% below to 25% below the current price of the stock. But with Costco, it's a dramatic 38% below its current price.
So, for buying Costco at $600 per share, the stock needs to drop 38%. And with Costco, I rate this as very unlikely. Looking over the past 5 years, Costco does have drops, but usually they're short-lived.
Usually it drops maybe 5, 10, maybe 20%. It does not typically drop nearly 40%. So, I believe that this is one of the most unlikely drops out of all the ones. Now, the reason why I set that buy target so much below the current price is because Costco's overvalued.
It is an overvalued company that I continue to hold. Anytime it pays me the huge special dividends, I put that capital into other positions. When I look at some assumptions here, if Costco grows its EPS at 9.3%.
And it trades at a nice multiple of 31. Now, right now, it's trading at a 50 multiple, but even assuming it trades at a 31 multiple at a $600 buyin price, that means that we're getting around a 10.6% return.
So, a decent return for the company, but still not amazing. And that's part of the reason I put the buy price so far below the current price.
