Observing the current investment landscape, I find an abundance of remarkable consumer goods firms that have consistently outperformed the market over extended periods, backed by robust financial histories. One such titan in this sector is Costco Wholesale (COST), a widely recognized and preferred discount warehouse club.
According to a study by The CORP-DEPO, Costco ranks second among all consumer goods companies in terms of market value, with an impressive figure of approximately $435 billion. Notably, only Walmart surpasses Costco in size, implying that Costco finds itself in an elite group of exceptionally large consumer goods companies.
Many investors find themselves drawn to Costco shares, given its significant surge in value – almost doubling over the last three years. This substantial increase, coupled with the company’s expansion, leaves some questioning whether now is an opportune moment to purchase Costco stocks. Here’s a rundown of why the company excels and why including this stock in your portfolio might be a shrewd choice.
What Costco is doing right
It might come as a shock to some that the majority of Costco’s earnings stem not from the goods sold in their warehouses, but rather from the membership fees. Impressively, Costco has excelled at offering value to its members through affordable products, which contributes to an astounding 93% rate of renewal for Costco memberships.
Due to the continuous membership renewals and the company’s success in gaining new customers, Costco now boasts a membership base of approximately 140.6 million at the conclusion of the third fiscal quarter (ending May 11), representing a nearly 7% growth compared to the same period last year.
I’ve noticed an impressive growth in Costco’s financial performance. In the recent quarter alone, their revenue soared by 8%, reaching a staggering $62 million. Moreover, diluted earnings per share experienced a significant boost of 13% to hit $4.28. Their comparable-store sales saw an approximate 6% increase in the same period. Interestingly, e-commerce sales witnessed a remarkable surge, approximately 15%.
Further expansion is anticipated for Costco, as management projects they will conclude fiscal 2025 with the addition of 24 new warehouses, bringing their global presence to close to a thousand locations.
Why Costco stock is a buy right now
Costco’s stocks are quite expensive, as their price-to-earnings ratio stands at 55, significantly higher than the average P/E ratio of 29 found in the S&P 500 index.
Despite Costco’s high stock valuation, its robust sales, earnings, and customer growth make it more acceptable. Additionally, since the overall market is currently exhibiting higher-than-usual valuations, spending slightly more on Costco shares might not be excessive.
Additionally, it seems that Costco’s business strategy is thriving, as recent findings suggest. Approximately one-third of Costco’s members earn an annual household income of $125,000 or more. This is significant because it implies that Costco might be less affected by a recession or economic downturn compared to some similar businesses.
Although concerns about a recession have lessened recently, there remains some apprehension regarding tariffs and their possible effects on consumer spending. Given that Costco boasts strong membership retention rates and a significant number of its members belonging to higher-income households, it’s reasonable to assume that the retailer can withstand any potential economic difficulties on a larger scale.
For those seeking a consumer goods company boasting an exceptional business strategy, growing revenues and profits, and expanding customer base, it’s challenging to find a better option than Costco shares. If you have reservations about its valuation, adopting a dollar-cost averaging approach might be prudent. Start with a modest investment and consistently increase your position incrementally over time.
Read More
- KPop Demon Hunters: Is Your Idol by Saja Boys Inspired by Real K-Pop Bands? Here’s What We Know
- Ultraman Live Stage Show: Kaiju Battles and LED Effects Coming to America This Fall
- Gold Rate Forecast
- Justin Bieber Teases New Album ‘SWAG’ with Tracklist Reveal
- 15 Best Sherlock Holmes Actors, Ranked from Worst to Best
- Superman’s Record-Breaking $21M+ Thursday Box Office: Highest of 2025
- Superman’s Rotten Tomatoes Score Blasts Past Expectations—Shocks Even the Harshest Critics
- 📢 BrownDust2 X BiliBili World 2025 Special Coupon!
- Tokyo Game Show 2025 exhibitors announced
- Dakota Johnson-Anne Hathaway’s Verity Release Date Out: Here’s When Colleen Hoover’s Movie Adaptation Will Hit the Screens
2025-07-19 13:01