Costco: A Warehouse of Dreams, or Just Shelves?

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Costco. The name itself echoes with the promise of bulk bargains, a momentary reprieve for families wrestling with the daily grind. The stock, they say, has risen – nearly 180% in five years. A tidy sum for those at the top, no doubt. But let us not mistake a rising tide for universal prosperity. The numbers are respectable – sales robust, memberships growing. Yet, it still trades below what the so-called experts deem its worth. $1,200 a share. A phantom figure, dangling before us like a poorly stocked shelf.

The Machine Expands

From 795 warehouses to 914. Cardholders swelled from 105.5 million to 140.6 million. A relentless expansion, a concrete testament to the ceaseless hunger of the market. Renewal rates climbed, a sign that people keep coming back for more. They offer a temporary escape from the sting of price increases, a fleeting illusion of control. And through it all – inflation, rising interest, geopolitical squabbles – Costco has thrived. They even dared to raise membership fees, and the masses still lined up. A curious spectacle, isn’t it?

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The Cracks Appear

But even the most imposing structures bear fault lines. The latest reports tell of a dip in renewal rates – 89.7%. A subtle tremor, perhaps, but a tremor nonetheless. They claim it’s due to digital signatures, some technicality. But I suspect it’s something more fundamental. The well isn’t bottomless. They’re trying to compensate – more cardholders, higher fees, more stores. A desperate attempt to maintain the momentum. The stock, meanwhile, has stalled. A predictable outcome, I’d say.

A Forecast of Dust and Echoes

The analysts whisper of growth – 8% revenue, 11% earnings. Steady, they say. But growth for whom? And at what cost? If Costco were to trade at a reasonable valuation – 25 times earnings – the stock would plummet. A harsh reckoning. But if the frenzy continues, if the market remains blind to reality, it might reach $1,209. A fleeting peak, built on sand. I suspect the truth lies somewhere in between. A period of stagnation, perhaps a slight decline. The machine will keep turning, but the gears are beginning to grind.

They speak of $1,200 by 2028. A distant promise. I wouldn’t wager on it. The world is a harsh place, and even the most fortified warehouses cannot withstand the relentless forces of economic gravity. Costco will endure, of course. It’s a powerful entity. But a soaring stock price? That’s a dream for those who can afford to dream, while others simply fill their carts and carry on.

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2026-02-19 19:13