At the core, every major publicly traded security offers the potential for future performance in exchange for current (actual) payment. For something like COST stock, the potential is quite limited — there’s only so much that a big-box retailer can do beyond selling stuff at a competitive price. More to the point, the reward is very much tangible because we have a long history of evidence that the underlying business is viable.

On the other hand, you have speculative tech firms that may be running a lot of red ink on their financials. Here, the potential is extremely vast, in part because the actual business remains questionable. Obviously, this dynamic figures into the share price, which is why such wagers don’t command COST stock like valuations.

It’s possible that, under similar conditions, retailers like Costco might face serious downside pressure. After all, an energy crisis and geopolitical conflicts don’t exactly mix well for consumer sentiment. However, COST stock has bucked such expectations, gaining 17% on a year-to-date basis. At the same time, COST has been stuck in a sideways consolidation since February — but a solid earnings report could break the deadlock.

On May 28, Costco will release its financial results for the third quarter, with analysts looking for earnings per share of $4.92 on revenue of $69.1 billion. Given its track record, there’s a decent chance that the company will exceed expectations. If so, that could help lift COST stock from its current stalemated technical performance.

Smart Money Traders Remain Risk-Balanced on COST Stock

A key indicator that points to a risk-balanced sentiment for COST stock is the volatility skew, particularly for the June 18 expiration date. By definition, the skew identifies implied volatility (IV) across the strike price spectrum of a given options chain. Since IV represents the expected kinesis of a security, the fact that traders are willing to pay for both downside protection and upside convexity reveals uncertainty over Costco’s forward trajectory.

People can really get into the weeds when it comes to options-related lexicon. For me, the volatility skew is akin to an insurance market. For COST stock (for the aforementioned expiration date), the main priority appears to be downside protection. Essentially, the premiums for out-the-money (OTM) puts are higher on a volatility basis compared to OTM calls.

Basically, traders don’t want to risk Costco stock tumbling following the underlying company’s earnings disclosure without adequate protection. Nevertheless, the premiums for both calls and puts are being bid up for strikes north of the current spot price. This structure tells us that sophisticated market participants don’t want to risk not having any leveraged exposure should COST break the present technical deadlock.

Both outcomes are possible, and without excessive confidence in either potential trajectory, the smart money is buying insurance for both sides. Another way to look at the volatility skew is that traders are worried about unstable price discovery. Because of the dynamic fundamental environment, it’s very possible that COST stock could materially detach from the current equilibrium.

This point underscores my earlier statements about premature presuppositions of smart money prescience. Yes, it is rational to assume that professional traders are better stock pickers than the average Joe or Jane, particularly because they trade more upstream to the custody of information (i.e., they’re not reading Motley Fool articles because Motley Fool is writing articles about them).

However, just because auto insurance premiums rise doesn’t necessarily mean an auto accident is more likely to occur. While the skew provides an interesting sentiment snapshot, it doesn’t give us a probability of what might happen next.

For that, we can turn to an inductive forecasting model.

Reading the Tealeaves for Costco Stock

Earlier, I stated that COST stock enjoys an upward bias. Specifically, using a dataset going back to January 2019, the odds that a random 10-week-long position will end up in the black are 71.7%. This figure is calculated from 261 rolling 10-week sequences out of a total of 364 sequences that crossed above the starting point. By distribution, we would expect COST to range between $990 and $1,070 (assuming a starting price of $1008.79).

Now, if we were to assume that Costco can deliver the goods for fiscal Q3, one of the more intriguing ideas to consider is the 1080/1100 bull call spread expiring June 18. For this trade to be fully profitable, Costco stock would need to rise through the $1,100 strike at expiration. That’s a little more than a 9% move from the current spot price, which is awfully ambitious.

Even the breakeven price of $1,084.30 is 7.49% above spot, which seems like a Hail Mary for COST stock. Subsequently, the probability of profit for this trade is defined at only 18.2%. This makes sense as $1,084 would be beyond the expected aggregate range of COST.

Still, here’s where it gets interesting. In the past 10 weeks, Costco stock printed six up weeks but incurred a downward slope. Under this rare 6-4-D sequence, the expected distribution (based on an inductive analysis of prior 6-4-D patterns) would approximately land between $950 and $1,200.

Admittedly, you would be incurring greater risk here, but the reward tail conspicuously reaches further (to $1,200 instead of $1,070). In addition, probability density would peak at $1,100, right where the aforementioned second-leg strike sits.

Yes, Black-Scholes-related forecasting models may assign an extremely low probability for the above spread to be fully profitable. However, under an inductive framework, COST stock could be favorably mispriced.

What’s driving that momentum? Institutional investors appear to be voting with their wallets. Recent 13-F filings show institutional buying running roughly 2-to-1 in favor of buyers versus sellers in dollar volume — a meaningful signal in a market where conviction is scarce. 

Casey’s third-quarter fiscal 2026 earnings report, released March 9, reinforces why the big money is paying attention. EBITDA for the quarter ended January 31 came in at $308.9 million, up 27.5% year over year, with diluted EPS of $3.49, up 49.8%. Management raised its full-year fiscal 2026 EBITDA growth guidance to 18%–20%. For patient investors, those numbers tell a story of compounding discipline that few retailers can match. 

Casey’s EBITDA Growth Makes It a Rare Retail Compounding Story 

Among S&P 500 and S&P 400 retailers, Casey’s is one of only three companies that delivered 8%-or-better EBITDA growth over one-, five-, and ten-year time horizons simultaneously, joining Costco (NASDAQ: COST) and Ollie’s Bargain Outlet (NASDAQ: OLLI) in that exclusive club. That consistency is the backbone of management’s raised full-year guidance, now targeting 18%–20% EBITDA growth for fiscal 2026. 

The strategy is built on three pillars: accelerating the food business, growing store count, and enhancing operational efficiency. With the rewards program surpassing 10 million active members in the third quarter and the private label program exceeding 300 SKUs, Casey’s is achieving margin gains that most convenience store operators cannot replicate. Its nine-month inside gross margin of 42.2% towers over the industry average of 37%, a gap driven by prepared food and reduced tobacco dependency. 

Nine-month EBITDA through January 31 reached $1.13 billion, up 21% from the same period a year ago. That puts the company well on track to exceed last fiscal year’s $1.2 billion full-year result. 

Institutional Ownership Trends Point to Continued Confidence 

When institutions buy stock at a 2-to-1 clip over sellers in dollar terms, it typically signals one of two things: undervaluation or earnings visibility. In Casey’s case, it may be both. The company trades at roughly 18x forward EBITDA — above the convenience store median of around 10–12x, but in line with quick-service restaurant (QSR) and retail medians, according to the company’s March 2026 investor presentation. 

That valuation premium is supported by a differentiated business model that is hard to replicate. Approximately two-thirds of Casey’s stores operate in towns with 20,000 people or fewer, giving it a rural moat that larger competitors find difficult to penetrate economically. Add in three owned distribution centers and a tanker fleet that delivers roughly 60% of its fuel, and you have a vertically integrated operation with structural cost advantages that show up directly on the margin line. 

Could a Stock Split Be the Next Catalyst for CASY? 

At $664 per share, Casey’s isn’t priced out of retail reach, but it’s not cheap either. The company has executed four stock splits in its history, most recently decades ago when share prices reached levels that management felt warranted an adjustment. With the stock having run from roughly $400 to nearly $700 over the past year, the question is fair to raise. 

No split has been announced, and the company has not signaled one publicly. But at current prices, a 2-for-1 split would bring shares into a range more accessible to individual investors and could modestly expand the retail shareholder base. That move would complement the company’s community-rooted brand identity. 

Technical Analysis: Bullish Structure With Short-Term Consolidation Likely

The daily chart tells a broadly constructive story. CASY has been in a sustained uptrend since last spring, consistently holding above its rising 50-day simple moving average, currently at $630.93. The recent spike in volume — 981,000 shares, well above the typical daily average near 305,000 — accompanied a pullback from February highs near $700, which warrants attention. 

The RSI sits at 53.79 on the daily, with the signal line at 66.16 — a mild bearish divergence suggesting short-term consolidation is more likely than a straight run higher. The post-market reading of $649.85 reflects some digestion after a strong multi-month advance. Support near the 50-day MA and the $630–$640 zone would be the level to watch on any further weakness. 

Casey’s Remains a Long-Term Compounder Worth Watching 

Casey’s General Stores is not a flashy growth story — it’s a grinder. A 50-year-old company that keeps adding stores, improving margins, and generating cash. With institutional buyers firmly in control, a strong balance sheet, raised full-year guidance, and a proven management team delivering top-quintile EBITDA growth, CASY deserves a close look from investors who favor durable businesses over short-term trades. 

Costco reported second-quarter fiscal 2026 results after the market closed on March 5, delivering net sales of $68.2 billion, good for 9.1% year-over-year growth. Comparable sales rose 7.4%, while adjusted comparable sales — stripped of gasoline price swings and foreign exchange impacts — climbed 6.7%. Traffic was up 3.1% and average ticket size increased 4.2%, signaling that existing members are both showing up more frequently and spending more when they do.

Net income grew 13.8% to $2.04 billion, and diluted earnings per share of $4.58 represented nearly 14% growth year over year. Membership income surged 13.6%, with paid memberships reaching 82.1 million, up 4.8%. The worldwide renewal rate held at 89.7%, and the U.S. and Canadian renewal rate was a remarkable 92.1%.

By virtually every traditional retail metric, this was a very good quarter. Yet COST stock slid roughly 2.4% in pre-market trading to around $979, but has since recovered above the psychologically significant $1,000 level as buyers stepped in on the open. That suggests the initial selloff wasn’t about the business, but about the price tag on the stock itself. 

Solid Fundamentals, But Already Priced for Perfection 

Costco’s business model continues to prove why it’s one of the most admired retailers on the planet. The gross margin expanded 17 basis points year over year to 11.02%, while SG&A improved 13 basis points to 9.19% of net sales. That’s a double positive that most retailers can only dream about. Digital momentum was equally impressive, with digitally-enabled comparable sales jumping 22.6% and app visits surging 63%.

E-commerce site traffic grew 32% and average order value rose 15%, suggesting Costco’s tech investments are beginning to pay tangible dividends. International performance was particularly noteworthy: Canada posted comparable sales growth of 10.1% and Other International came in at 13.0%, both outpacing the U.S. segment’s 5.9% gain. The company also continued its warehouse expansion, opening 10 new locations in the first half of fiscal 2026, with 18 more expected before year-end, bringing the total to approximately 942 warehouses globally. 

The Dividend: Reliable, But Modest 

Costco has increased its dividend for 21 consecutive years, growing the payout at roughly 12-13% annually over the past five years. The current quarterly dividend of $1.30 per share works out to $5.20 annually — a yield of just around 0.52% at current prices. The payout ratio is a conservative 27%, meaning the dividend is in no danger and future growth is virtually guaranteed.

Costco also has a history of issuing special dividends, having paid out large one-time cash distributions in prior years. For long-term income investors, the dividend consistency and growth rate are admirable. But a 0.52% yield is hardly what drives people to pay a premium for this stock. At current prices, Costco’s dividend alone won’t move the needle for most investors. That puts the entire return thesis squarely on capital appreciation. And that’s where the math starts to get complicated. 

Headwinds: What If the Economy Softens? 

Costco’s business has historically held up better than most retailers in downturns, because value-seeking consumers tend to gravitate toward the warehouse model when budgets tighten. That resilience is real. However, it is not unlimited. The company’s own safe harbor disclosure flags several risks worth watching: softening consumer and small business spending patterns, geopolitical conditions including tariffs, rising employee costs, and foreign exchange pressures.

Gas price deflation is already shaving roughly a percentage point off headline comparable sales, as evidenced by the 70-basis-point gap between reported and adjusted comps. New warehouse openings, while a long-term positive, can also create short-term cannibalization effects on existing locations. Meanwhile, with a trailing P/E ratio hovering around 54 times earnings, Costco has almost no margin for error. Any material miss on traffic trends or membership renewal rates could send the stock sharply lower from what are already stretched valuation levels. 

COST Stock: Extended, But a Golden Cross Offers Hope 

The daily chart tells an interesting story. COST peaked near $1,075 in early spring 2025, then spent the better part of the summer and fall retreating to lows around $850 before staging a strong recovery into early 2026. Notably, a bullish golden cross — where the 50-day moving average crosses above the 200-day — appeared in COST’s chart for the first time in nearly three years on the day of the earnings release, which is a historically positive long-term signal.

The pre-market dip to $979 briefly undercut the 50-day weighted moving average sitting near that same level, but Friday’s intraday recovery back above $1,000 suggests buyers treated the pullback as an opportunity rather than a warning. The MACD remains in a mild bearish cross from recent elevated levels, meaning short-term momentum has softened.

The $1,000 level is now the key line in the sand — holding above it keeps the bullish structure intact, while a sustained break below could reopen a test of the $940-$950 area. To the upside, clearing $1,025 would set up a push toward the $1,067 52-week high and ultimately the $1,100 analyst price target. 

Bottom Line: A Great Company at a High Price

There is nothing wrong with Costco’s business. The membership model is sticky, the brand is beloved, the balance sheet is strong, and management executes consistently. The question is not whether Costco is a great company — it clearly is. The question is whether it’s a great stock at nearly $1,000 per share.

With an average analyst price target around $1,050-$1,085 and a top target of roughly $1,100-$1,200, the implied upside from current levels is relatively modest for a stock carrying a premium multiple. Investors who already own Costco and are reinvesting that growing dividend for the long haul are likely fine. But for new money seeking meaningful appreciation, the risk-reward picture at current valuations warrants careful scrutiny. 

At first glance, circumstances seem normal. For the upcoming disclosure, scheduled for release on Thursday after the closing bell, Wall Street analysts expect earnings per share of $4.54 on revenue of $69.26 billion. In the year-ago quarter, Costco posted EPS of $4.02 on revenue of $63.72 billion, a performance that missed slightly on the bottom line but exceeded on the top.

Generally, while Costco’s financial print can be hit-or-miss, market sentiment for COST stock tends to be positive. For example, over the past five years, the security has gained roughly 218%. Over the past year and a half, COST has carried an earnings multiple of over 50.

Basically, such a ratio translates to an earnings yield of around 2%, which some might argue is alarmingly low. After all, you could just put your money into risk-free Treasuries and get double the aforementioned yield.

As it turns out, some investors appear to be getting the message. In the past year, COST stock is down about 4%. With the U.S. and Israel launching a military strike against Iran, the disruption that this conflict poses for the global economy forces a rethink for previously high-powered names.

Volatility Skew Reveals a Cautious Outlook for COST Stock

As I’ve pointed out previously, volatility skew is one of the most important indicators to watch. Definitionally, the skew identifies implied volatility (IV) — or a stock’s potential range of motion — across the strike price spectrum of a given options chain. Essentially, it’s a screener that showcases the surface-area distortion of volatility space, allowing traders to identify how the smart money is positioning risk.

If we were to frame the skew as a security protocol, it would reveal the vulnerability points that are most at risk. Therefore, the entity seeking protection would beef up defenses to address said vulnerabilities. This beefing up leads to elevated put IV at the strike prices of concern.

What’s fascinating is that, for the April 17 expiration date, the skew shows put IV rising on both ends of the strike boundaries. With the rising skew toward the left-hand boundaries (toward lower strikes), this setup suggests that smart money traders are concerned about downside tail risk. Toward the right, the priority appears to be protecting actual long exposure to COST stock via synthetic shorts.

Notice what’s happening with call IV. Relative to puts, there’s little urgency to seek upside convexity. Again, the priority among sophisticated market participants appears to focus on not losing money rather than efforts toward extracting capital growth.

We see a similar skew for the March 6 weekly options chain, the expiration date closest to Costco’s Q2 disclosure. The bulk of curvature rise is concentrated on the far-left side of the spectrum. Again, the main motif here is that traders are focused on mitigating a sharp loss rather than betting on a rising share price.

The Warning Signal for Costco Stock and the Broader Index

According to the Black-Scholes-derived expected move calculator, Costco stock for the April 17 expiration date is expected to land between $933.68 and $1,081.34. However, this assumption is based on a static formula that does not account for prior market context. Essentially, it’s a reference marker — one that’s only valid if we assume a world that simply may not exist.

One of my biggest contentions about Black-Scholes is that the market generally operates under the Markov property; that is, forward probabilities depend on the context in which the calculations are being applied. For example, in a football game, the odds of winning the contest will change depending on whether you have a sizable lead or not.

My problem with relying exclusively on Black-Scholes to make forward estimations is that the formula is completely blind to context. So, whether COST stock has just completed a massive rally or recovered from a catastrophic fall, the same math is applied. Context is merely the starting point of a predefined analysis and offers no fundamental change to the estimated distribution.

Rather than this parametric (predefined) approach, Markov systems measure and account for the distributional changes that can occur due to different contexts. In the case of the broader equities market, the SPY ETF in the past 10 weeks printed seven up weeks. However, the overall slope of this 10-week trend has been negative.

What’s so special about this 7-3-D sequence? It’s an extremely rare quantitative signal, for one. More critically, when this signal flashes, past analogs suggest that the future weeks could lead to sharply negative price action before an eventual slow recovery.

Now, it must be said that all future statements are inductive by nature; there’s nothing that logically compels the 7-3-D sequence to cause a downturn in the SPY ETF. However, my argument is that this unique harbinger is flashing at a particularly vulnerable time for the U.S.

Also, it’s worth keeping in mind that if the Iranians manage to drag the U.S. into a war of attrition, the geographic advantage (Iran being an extremely mountainous country) may lean to them. That’s another reason why I don’t view this signal as merely an inductive fantasy.

Where Does This Leave the Retailing Giant?

Turning our attention back to COST stock, the concern in the weeks ahead is that traders may be tempted to trim their exposure to the retailing giant. With a year-to-date performance of nearly 17% along with a hot earnings multiple, I’m not entirely sure if I trust the rally to continue.

Further, COST’s quant signal — a 6-4-U sequence over the past 10 weeks — doesn’t lend itself to a particularly strong forward performance. Over the next 10 weeks, an inductive calculation predicts a range between $980 and $1,065. The problem, though, is that on an aggregate basis, the forward 10-week return would typically range between $990 and $1,070.

I’m not sure if I like the idea of paying a long premium for a quant signal with a lower-than-average probabilistic profile. For those who want to aggressively speculate, a near-term wager featuring the 985/980 bear put spread expiring March 6 could be enticing. Otherwise, COST stock might be a name to watch on the sidelines.

The issue is that growth is slowing. The same is true of membership growth, although that’s a trickier issue. In Costo’s first quarter 2026 earnings report, the company announced a 400,000 sequential increase in membership. However, that’s down sharply from the last few years in which Costco has delivered quarterly membership growth of over one million in several quarters. 

Of perhaps greater concern was a 10 basis points (0.10%) decrease in the company’s renewal rate, which still came in at 92.2% in the United States and Canada and 89.7% worldwide.  

In response to that metric, Costco said the decline was largely due to a greater prevalence of new members signing up online, who renew at a slightly lower rate than those who sign up at a warehouse location.  

This creates an interesting question for investors. Is COST stock a buy-the-dip opportunity, or are investors beginning to see evidence that the economy is putting a strain on the company’s loyal customer base. 

History is On the Side of the Bulls 

It’s safe to say that 2025 is an outlier for COST stock. Over any meaningful time period, the stock has delivered a total return that exceeds the broader market. In fact, over the last 15 years, COST stock has delivered a total return of over 1,800%.  

There’s also the company’s balance sheet. At the end of the quarter, Costco was sitting on a cash balance of $16.2 billion. That’s an increase of over 15% YoY. That kind of cash pile means investors shouldn’t be concerned about Costco’s financial health. Costco’s sound financials are also evident in its growth in both net income and gross margin.  

Analyst Sentiment is Better Than it Seems 

Since Costco’s earnings report, analyst sentiment has been mixed. Many analysts have reiterated a Buy rating (or the equivalent). However, a significant number of analysts have lowered their price targets.  

The most bearish call came from Roth Capital, which gave COST stock a rare Sell rating with a price target of $769, down from $906. The firm cited the weaker membership trends noted above and steeper competition as two reasons for its opinion.  

More interestingly, it cited the greater caution around starting a family. I’ll admit that could be a longer-term threat. However, it would also be an issue for Walmart (NYSE: WMT) and BJ’s Wholesale (NYSE: BJ) both of which are committing to building out more stores.  

These are legitimate concerns. But they don’t account for the fact that although many analysts are lowering their targets for COST stock, the new targets are significantly above the stock’s current price. Not to mention, the consensus stock price is about 15% above the stock’s closing price on December 19.  

Two Other Reasons to Buy COST Stock 

First, investors get a solid dividend that needs to be put into context. At first glance, some investors might scoff at the 0.67% dividend yield. But the proof is in the payout and the growth of that payout.  

Costco stock pays out $5.20 per share on an annual basis. The company has increased that dividend for 22 consecutive years, and it has a payout ratio of 27.85%, which means the dividend is safe and well supported given the company’s massive cash position.  

Plus, investors may get a special dividend. One reason that COST stock dropped after its earnings report was that the company declined to confirm if a special dividend would be forthcoming. However, many analysts believe that Costco will announce one before the end of the year as they did in both 2020 and 2023.  

Second, although the stock has dropped from the $1,000 price it made earlier this year, it still has to be considered a candidate for a stock split. The company hasn’t split its stock since 2000 and has indicated that it has no intention of a split at this time.  

But opinions change. If Costco management believes that the stock price is prohibitive for retail investors, it could take the step to spark demand.  

The Bottom Line: Know What You Own 

Let’s look at a “worst-case” scenario. If you believe the report from Roth Capital, then COST stock could have another 10% to fall.  

However, over the long term, I’d say so what? If you’re looking at Costco as a long-term position in your portfolio, then the stock is giving you a buying opportunity today, and it could be an even better buying opportunity at a lower price.  

Keep in mind that even at 42x earnings, the stock still trades at a discount to its historical average. COST stock has earned the right to have a high valuation.  

The biggest issues facing Costco are macroeconomic in nature. That’s not to say they’re not significant. However, until there’s evidence that the company’s membership is declining as opposed to slower growth, it’s hard to bet against the stock’s history.  

As of this writing, consensus estimates are clustered around 2.8%. A cooler number would reinforce “soft landing and gradual easing” as the base case. On the other hand, anything meaningfully hotter would revive concerns that inflation is not confined to areas such as shelter and food.

What should investors do? This PCE release is less about calling the exact number and more about having a playbook for both outcomes. If inflation comes in tame, the winners are likely to be rate‑sensitive housing and high‑quality consumer names that benefit from easier financial conditions and a healthier consumer.

If the data runs hot, history suggests that energy producers and select regional banks can offer better protection, as higher long-term yields and persistent inflation expectations reshape sector leadership.

Below are four stocks to buy: two are positioned for a cooling‑inflation setup and two for an economy where inflation is likely to be higher for longer. ​

Stock to Buy on Cooling Inflation: Lennar

A Levered Play on Lower Rates and Housing Demand

Lennar (NYSE: LEN) is a direct way to express a “cooling inflation, easing Fed” thesis because lower PCE over time supports lower mortgage rates, better affordability, and a release of pent‑up housing demand. Management’s latest commentary emphasizes that the long-term need for housing remains intact and that the company is focused on affordability, even-flow production, and cost efficiency to capitalize on demand improvements.

Despite near‑term pressure from high mortgage rates, recent analyses highlight early signs of stabilization as borrowing costs edge down and customers re‑engage, with Lennar choosing discipline on volumes to protect margins rather than chasing every sale. Structural housing shortages and an eventual easing cycle form the core of the bull case, with some estimates calling out double‑digit upside versus fair value if margins normalize with stronger demand.

In a world where a softer PCE accelerates talk of rate cuts, Lennar gives investors a liquid, large‑cap way to lean into a housing upcycle without having to time the exact bottom in mortgage rates.

Stock to Buy on Cooling Inflation: Costco

Inflation‑Weary Consumer, Membership‑Driven Moat

Costco (NASDAQ: COST) is a high-quality way to play cooling inflation because it benefits from a healthier consumer and lower interest rate backdrop, while already proving it can grow through tougher macroeconomic conditions. In its fiscal 2025 Q4 report, Costco delivered 8% year‑over‑year net sales growth of roughly $84.4 billion and net income of about $2.61 billion.

The company also posted comparable sales growth of 5.7% globally and 5.1% in the U.S. This underscores resilient demand even as shoppers stayed cautious on discretionary spend.

The membership model is central to the story: fees climbed to approximately $1.72 billion with global renewal rates above 90%, providing a sticky, high‑margin revenue stream that helps smooth out the macro cycle. Management’s well‑publicized refusal to raise prices on key traffic drivers like the $1.50 hot dog combo and $4.99 rotisserie chicken has reinforced customer loyalty and traffic, even with elevated inflation in recent years.

Costco’s combination of value pricing, membership economics, and growing e‑commerce (digital sales rising at a double‑digit pace) positions it as a core holding for investors who want both defensiveness and upside in a softer‑inflation, Fed‑easing cycle.

Stocks to Buy on Potentially Higher Inflation: ExxonMobil

Cash‑Flow Machine in an Inflationary World

If the PCE print runs hot and the market is forced to price “higher for longer,” ExxonMobil (NYSE: XOM) is a logical beneficiary. Energy producers historically outperform when inflation is elevated, and commodity prices strengthen.

Sector research on energy ETFs shows that during bouts of macro stress and inflation worries in 2025, energy equities often rose on days when the broader market sold off. This highlights their role as a portfolio hedge when real yields and inflation expectations move higher.

ExxonMobil’s edge is its portfolio of advantaged, low‑cost assets, particularly in Guyana and the Permian Basin, which allow it to generate attractive returns even at relatively low oil prices. The company has indicated that more than half of its production comes from these high‑return assets and has outlined a plan to push corporate breakevens toward about $30 per barrel by 2030. That reinforces its ability to produce durable free cash flow through the cycle.

Recent earnings updates also show that, despite some year‑over‑year volatility in segment profits, ExxonMobil continues to post multi‑billion‑dollar quarterly earnings and return significant capital to shareholders via dividends and buybacks.

Stocks to Buy on Potentially Higher Inflation: Huntington Bancshares

Regional Bank with Rate and Growth Leverage

Huntington Bancshares (NASDAQ: HBAN) gives investors a more nuanced way to play a hotter‑inflation or “higher‑for‑longer” rates narrative. Regional banks can benefit from firm long‑term yields and healthy loan growth.

In 2025, Huntington has reported robust loan and deposit trends: second‑quarter results showed average loans up about 8% year over year and deposits up roughly 6%, while maintaining a common equity tier 1 (CET1) capital ratio around 10.5% and improving tangible book value per share in the mid‑teens percentage range.

That growth is being reflected in earnings power. Management recently upgraded its 2025 net interest income guidance to an 8%–9% increase, alongside a raised loan growth outlook of 6%–8%, reflecting confidence that the bank can expand its balance sheet and margins even in a challenging rate environment.

Third‑quarter commentary highlighted an 11% jump in net interest income and rising fee revenue, while credit quality metrics remain solid, with low net charge‑offs and strong reserve coverage.

If a hot PCE reading extends the “higher‑for‑longer” backdrop and supports a steeper curve over time, Huntington’s combination of above‑peer loan growth, expanding franchise in fast‑growing regions like Texas and the Carolinas, and solid capital position makes it an attractive choice for investors comfortable with cyclical financial exposure.

Stocks to Buy Around the PCE Print

Whether the September PCE data confirm cooling inflation or flash a hotter‑than‑expected signal, having defined “cool” and “hot” playbooks: Lennar and Costco on one side, ExxonMobil and Huntington on the other, gives investors a more disciplined way to trade the macro narrative rather than guessing the headline number.

However, according to one source, Black Friday sales are expected to be over $11.7 billion in 2025, a year-over-year increase of 8.3%. And this holiday season, American consumers are expected to spend over $1 trillion for the first time.  

That said, consumers still feel the impact of higher prices. Affordability is on the lips of many economists and the executives who work at these retailers. The message is the same. Even high-income consumers are trading down to find value where they can.  

As an investor, this means you should keep it simple when it comes to Black Friday stocks. That is, buy the names that have proven they can attract consumers no matter what happens in the broader economy. Here are three names to consider.  

Costco: The High Valuation is a Feature Not a Bug 

Costco Wholesale Corp. (NASDAQ: COST) is one of the most consistent performers in the retail space. A key reason for this is the company’s subscription model. That revenue goes almost entirely to the company’s bottom line, and the company has a retention rate of over 90%.  

However, after hitting the psychologically significant $1,000 per share mark twice in 2025, COST stock is in a downtrend as many investors question its premium valuation.  

They shouldn’t. 

Costco’s high valuation is a feature, not a bug, because investors are paying for a level of consistency and predictability that few retailers can match. In addition to its subscription model that gives Costco a built-in customer base that reliably drives traffic and spending, the company has strong private-label penetration and disciplined pricing, which keep shoppers loyal even when consumer spending softens. 

The company continues to open new warehouses in underserved domestic markets and high-growth international regions, which provides steady, measurable volume growth. Finally, Costco’s financial stewardship strengthens the premium case. The company maintains a conservative balance sheet, regularly issues special dividends, and delivers consistent earnings growth.  

In short, investors pay more because Costco reliably delivers more. 

Amazon: It’s Time for the Company’s “Other” Business to Shine 

Amazon.com Inc. (NASDAQ: AMZN) is one of the most important technology stocks in the artificial intelligence (AI) revolution. The company’s Amazon Web Services (AWS) division is a primary driver of the company’s growth. It’s also the reason the company can commit billions of dollars to the buildout of AI data centers. 

But the holiday season is a good reminder that Amazon’s legacy e-commerce business is doing just fine. In fact, the company that essentially invented the category looks ready to shine again in 2025.  

E-commerce may no longer be Amazon’s fastest-growing segment, but it remains a powerful engine of profitability and cash flow. The company has streamlined its fulfillment network, cut delivery times, and expanded same-day capabilities, all of which are boosting order volume heading into 2025.  

Advertising revenue tied to its retail ecosystem is accelerating as well, adding a high-margin tailwind that complements AWS. With consumers expected to stay value-focused, Amazon’s scale, logistics advantage, and Prime ecosystem should help the company capture additional share. AWS may fuel the AI future, but Amazon’s “other” business is quietly strengthening the foundation beneath it. 

Bath & Body Works: The Numbers Don’t Lie, It’s a Buy 

Bath & Body Works Inc. (NYSE: BBWI) may seem like a surprising choice among Black Friday stocks to buy. BBWI stock is down over 55% in 2025 based on tepid revenue and earnings. The company has a loyal customer base, but loyalty hasn’t been enough to attract customers in a tough market.  

But the numbers don’t lie. The fourth quarter is historically the company’s strongest quarter in terms of both revenue and earnings. That’s not reflected in the company’s stock price or in its valuation. At around 5x forward earnings, the stock is trading at nearly a 40% discount to its historic average. 

BBWI stock may not be a buy-and-hold stock. But it looks like an excellent choice for investors looking for swing trading opportunities.  

Let These Black Friday Stocks Start Your New Year Right 

The last month of the year is a time when institutional investors rebalance their portfolios and look ahead to a new year. These are just the kind of opportunities they look for.  

These Black Friday stocks are proven winners of seasonal strength, and in the case of Costco and Amazon, they have multiple levers to pull to deliver long-term shareholder value.