In the retail sector, Costco (COST -0.08%) has been one of the biggest long-term winners. A favorite of Warren Buffett's late partner, Charlie Munger, Costco's killer business model, low-price ethos, and consistent growth even in a tough retail environment have made for another winning year in 2024.
When it comes to solid retail businesses, investors may struggle to outdo Costco (COST -0.08%). The warehouse retailing giant's stock seemingly continues to defy gravity.
In the current economic environment, many retailers are struggling. While unemployment remains low and growth in gross domestic product (GDP) has been solid, the past few years of high inflation have eaten into consumers' budgets.
This year has been a challenging one for many retailers, but Costco Wholesale (COST -0.08%) isn't one of them. The business has continued to do well under a myriad of economic conditions, continuously posting strong quarterly results.
Examine Costco's (COST) international revenue patterns and their implications on Wall Street's forecasts and the prospective trajectory of the stock.
Costco Wholesale (COST -1.03%) shares didn't close above $1,000 by late 2024, but they flirted with that impressive figure. The stock rose 50% through mid-December, doubling the rally in the S&P 500.
Costco Wholesale's stock has become the Palantir Technologies of the retail world, boasting a steep valuation and an ardent investor base. The warehouse giant continues to deliver value to its 77 million members worldwide with unbeatable deals like $4.99 rotisserie chickens and a $1.50 hot dog and soda combo—unchanged for 40 years.
Costco Wholesale (COST -0.62%) can be a fun place to shop. In exchange for an annual membership fee, it offers low-priced products its customers want.
Costco Wholesale (COST -1.09%) passed $1,000 a share on Dec. 11, reaching a new all-time high and pushing its market capitalization past $440 billion. Costco's stock price is up big this year, but its earnings aren't growing that quickly.
Price hikes are only partially offsetting volume declines, but a rise in membership fees can lift overall comps in the future as customers' membership renewal periods trigger. Warehouse expansion-led growth is performing better than I expected, as productivity and return metrics such as fixed asset turnover and pre-tax ROICs have shown no signs of deterioration. Valuations are even higher vs median comps than last time but COST stock is still ticking along, supported by the fundamental tailwind of earnings growth expectations.
Costco is the latest retailer to warn that President-elect Trump's proposed tariffs would raise costs. However, the warehouse giant said it's hard to predict the impact.
Highly valued or not, Costco NASDAQ: COST can continue to rally in 2025. The stock is pricey, trading at 55x its current year earnings estimate.