In This Article:
Key Points
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Costco’s massive scale helps support its unrivaled customer value proposition, making its warehouses a top shopping destination.
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Management remains focused on opening new stores both in the U.S. and internationally.
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Costco shares have crushed the market historically and are now trading at a steep valuation.
Costco (NASDAQ: COST) has been an outstanding holding for investors. In the past 40 years, shares have climbed 14,540%, crushing the S&P 500 index. Including dividends, the gains are even more impressive.
This top retail enterprise has many attractive qualities that can draw in investors looking to own a great business. But is Costco a worthy long-term buy right now?
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Costco's advantages
Costco is a top-notch company. It has become a favorite among consumers looking to score huge savings on a variety of merchandise. Offering a no-frills shopping experience with bulk-size goods has supported the retailer's brand presence in a competitive industry.
The durability Costco operates with is impressive. Whereas it seems everyone is worried about tariffs these days, this company keeps posting same-store sales growth. I'd bet that even in a recessionary period, Costco would see strong demand.
What's more, Costco's scale can't be overlooked. The business reported $62.5 billion in net sales in Q2 2025 (ended Feb. 16). As a result, it can flex its bargaining power with suppliers. These vendors have no choice but to play ball, or else they'd lose an invaluable retailing partner. The cost savings Costco acquires benefit shoppers in the form of low prices. That can drive even more spending, furthering supporting Costco's scale advantage.
Running a membership-based model provides the business with a high-margin and predictable source of revenue. Even better, it can boost customer loyalty. Knowing that they paid a certain amount for an annual Costco membership encourages consumers to visit the company's warehouses over competitors' stores.
Show me the growth
It shouldn't come as a surprise that Costco's main growth strategy centers on opening new warehouses. In fiscal 2024, the company added 29 net new stores to its footprint. The plan in fiscal 2025 is to open 25 more. Management talked about keeping a pace of 25 to 30 openings annually over the long term.
Besides the U.S., the business has a presence in 13 different countries. However, most of the expansion today is still happening domestically. That's a positive indicator that the leadership team still sees tremendous potential in its biggest and most lucrative geography.