2 Stocks I'm Ready to Buy if the Market Drops Again

Costco reported March sales up 11.3% year over year and comparable sales up 9.4%, with digitally enabled sales rising 23%, underscoring resilient retail demand. Palantir posted 70% revenue growth in Q4 2025, U.S. commercial growth of 137%, and a record $4.3 billion in total contract value, but the article emphasizes both stocks remain expensive at 52x and 231x trailing earnings, respectively. The piece is primarily valuation-focused commentary rather than new company-specific catalyst news.

Analysis

The market is rewarding two very different scarcity premiums: COST for durable consumer traffic and PLTR for scarce AI operating leverage. In both cases, the second-order issue is not business quality but reflexivity—when a stock trades at a premium multiple, even good execution can underperform if the next marginal buyer is already positioned. That makes these names less about fundamentals in isolation and more about timing versus crowded ownership and earnings expectations.

COST’s resilience is attractive, but the real incremental upside likely comes from operating leverage in ancillary services, not core basket growth. As digitally enabled sales scale, the mix shift could quietly improve economics through lower labor intensity and better traffic retention, while also putting pressure on omnichannel peers that lack membership economics. The risk is that any slowdown in renewal momentum or traffic normalization would de-rate the stock faster than the business would deteriorate, because the valuation already capitalizes years of consistency.

PLTR is the more interesting near-term setup because the stock is priced for near-perfect conversion of contract value into durable revenue and margin expansion. The key vulnerability is that the market is extrapolating a strong AI budget cycle into a multi-year annuity, but government and large-enterprise procurement can be lumpy, and a single guide-down can compress the multiple sharply. If the next print confirms durable U.S. commercial acceleration without deceleration in deal size, the stock can still grind higher; if not, it has more downside convexity than COST because expectations are much further ahead of fundamentals.

Consensus appears to be missing that the best short-term edge may be in patience, not conviction: both names can remain excellent companies while still being poor entry points. The cleaner expression is to buy weakness into event risk rather than chase momentum, because the valuation risk is asymmetrically larger than the fundamental risk over the next 1-2 quarters. In a broad market pullback, PLTR likely offers the better tactical entry, while COST is the higher-quality compounder for a lower-beta capital deployment.

Key Decisions for Investors

• Wait for a market drawdown or post-earnings selloff to initiate a starter long in PLTR; target a 10-15% lower entry versus current levels, with a 6-12 month hold if U.S. commercial growth re-accelerates and contracts continue to convert into revenue.
• Use COST as a conditional buy-on-weakness, not a chase; accumulate only on a 7-10% pullback where the forward multiple compresses enough to restore upside/downside symmetry over 12-24 months.
• For tactically bullish exposure to AI, prefer a call spread in PLTR rather than stock; the stock can re-rate higher on a clean print, but the option structure limits damage if the multiple compresses after earnings.
• Relative-value trade: long COST / short a basket of lower-quality discretionary retailers on any consumer confidence rollover; COST should preserve traffic and membership stickiness better if demand softens over the next 1-2 quarters.
• Avoid chasing both names at current levels; if forced to choose, PLTR has the better event-driven upside but also the higher drawdown risk, while COST is the superior long-term compounding asset with less attractive near-term entry.