Costco: A Full Pantry, But a Lean Harvest?

Now, I’ve been watchin’ stocks longer’n most folks have been breathin’, and I reckon I’ve seen a few fortunes made and a heap more squandered. There was a time, not so long ago, when a fella could’ve laid down five or six thousand dollars on a share of Costco (COST 0.51%) and now… well, now he’d be swimmin’ in more money than Croesus himself. A return of seventeen thousand percent, they say. Makes a man wonder if he shouldn’t have spent less on whiskey and more on warehouse receipts.

But the question ain’t about the past, is it? The question is this: is it too late to join the party? I’ve been ponderin’ on it, and I’m inclined to believe it is. Not that Costco is a bad store—a man can get a rotisserie chicken there for a song, and that’s a blessin’ in these times—but a bargain today ain’t always a profit tomorrow. Let me explain, if you’ve the patience of a saint.

Scale’s a Fine Thing, But Even Mountains Have Limits

Costco’s done right by itself, no doubt. They’re the third-largest retailer in the world, sellin’ a mountain of goods, and keepin’ their customers comin’ back for more. They don’t clutter their shelves with every trinket and gewgaw under the sun, like some stores do. A mere four thousand items, they offer. Compared to the thirty thousand a typical grocer boasts, that’s a sensible approach, I reckon. They squeeze a good deal out of their suppliers, and pass the savings on—a rare virtue these days.

But even a giant has its limitations. A fella can only eat so much chicken, no matter how cheap it is. Costco’s growth, while impressive, is bound to slow down. They grew at a clip of thirteen percent a year for a decade, but I’d wager that pace won’t hold. The world ain’t an endless field of unclaimed territory. They plan to open twenty-eight new warehouses this year, bringin’ the total to nine hundred and forty-two. But soon, they’ll run out of good spots, and the pickin’s will get slim.

The Market’s Got a Powerful Imagination

Now, let’s talk about what the market thinks Costco is worth. It’s a curious thing, this stock market. Folks act like they’re predictin’ the future, when they’re mostly just guessin’ what other folks will guess. Costco’s shares trade at a price-to-earnings ratio of fifty-two, if you can believe it. That’s more than double what the S&P 500 is sellin’ for, and a good forty percent higher than even Nvidia. Nvidia, mind you, is buildin’ the future with them computer chips of theirs!

Investors are payin’ a premium for Costco because they think it’s a safe bet. A steady, reliable business, they say. And it is, to a degree. But a safe business ain’t necessarily a profitable one, not at this price. You’re payin’ so much for the security that you’re likely to be disappointed with the returns. It reminds me of buyin’ a fancy lock for an empty cabin. It’s a comfort, maybe, but it don’t add nothin’ to the value.

So, is it too late to buy Costco? I reckon it is. The pantry’s full, but the harvest is likely to be lean. There are other fields to plow, other opportunities to be had. And a wise man always looks for the best bargain, not just the most comfortable one.

2026-03-16 22:24

Scale’s a Fine Thing, But Even Mountains Have Limits

The Market’s Got a Powerful Imagination

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