The cost stock price today edged up to $112.15, buoyed by positive sector sentiment as inflation data came in below estimates. Volume spikes show increased participation from swing traders. We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. To start off with, we need to estimate the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. Storch Advisors CEO and former Toys"R"Us and Target executive Gerald Storch reacts to a strong November retail report and explains how industry winners are 'value-based' players. Cost stock price today is $113.50 in midday trade, sustaining momentum from recent positive consumer sales trends. The sector’s relative strength index remains comfortably bullish.
