Is Costco a good stock to buy?
Costco Wholesale (NASDAQ:COST) stock continues to be one of the best blue-chip stocks investors can buy and remains the gold standard of the retail sector. In the last 12 months, COST stock has risen 40%, bringing its five-year return to shareholders to 230%.
Buy COST Stock
Investors waiting for a pullback could be waiting a longtime. With a new CEO tenure starting, the economy remaining resilient, and the stock market booming, investors should consider a position in this leading grocery retailer. COST stock is a buy.
Costco Wholesale Corp (NASDAQ:COST)
The 31 analysts offering 12-month price forecasts for Costco Wholesale Corp have a median target of 697.00, with a high estimate of 755.00 and a low estimate of 502.00. The median estimate represents a +1.46% increase from the last price of 686.95.
Costco has created a business model that works well. The company offers bulk items at discount prices and requires payment of an annual membership to take advantage of those low prices. The company doesn't spend on advertising.
The intrinsic value of one COST stock under the Base Case scenario is 418.9 USD. Compared to the current market price of 685.22 USD, Costco Wholesale Corp is Overvalued by 39%.
Investors shouldn't expect Costco's margins to significantly expand, as its business model means that it must keep prices, and therefore margins, low. Costco continues to open new stores, which should help grow its revenue, but same-store sales are unlikely to grow much faster than mid-single digits.
COST boasts an average earnings surprise of 2.1%. On a historic basis, Costco has generated cash flow growth of 14.1%, and is expected to report cash flow expansion of 10.4% this year. With solid fundamentals, a good Zacks Rank, and top-tier Growth and VGM Style Scores, COST should be on investors' short lists.
| Stockholder | Stake | Shares owned |
|---|---|---|
| The Vanguard Group, Inc. | 8.57% | 38,008,775 |
| BlackRock Fund Advisors | 4.55% | 20,169,367 |
| SSgA Funds Management, Inc. | 4.16% | 18,458,926 |
| Geode Capital Management LLC | 1.94% | 8,594,392 |
Why Costco probably won't do a split this year. If Costco were going to do a stock split, it probably would done so in 2022 along with the many other big-name stocks that initiated splits, including Amazon, Alphabet, and Tesla.
- The all-time high Costco stock closing price was 694.97 on January 19, 2024.
- The Costco 52-week high stock price is 698.66, which is 2.8% above the current share price.
- The Costco 52-week low stock price is 465.33, which is 31.6% below the current share price.
Why did Warren Buffett sell Costco stock?
While Buffett has never discussed his reasoning of selling his Costco shares, speculation reveals he felt the stock had become overvalued. Since Buffett sold out of Costco, its share price has gained 60%. COST stock is up 145% over the last five years.
If you see the long-term opportunity, which is compelling, keep in mind that you can't time the market. Costco is a great stock to buy even now, and it's likely to reward shareholders in 2024. Jennifer Saibil has no position in any of the stocks mentioned.
We can see that Costco far outpaced Walmart in any kind of earnings metric. Even the dividend CAGR stands at 12.4% (Costco) vs. 1.93% for Walmart. And this is while operating in the same sector.
However, Costco has maintained steady revenue growth even in challenging times, which is probably why its stock has gained 21.5% year-to-date, outperforming the S&P 500's (SPX) 9.5% gain.
Costco's deep economic moat, consistent profit growth, and massive pile of cash make it especially appealing to investors who prioritize safety and longevity. Shares could continue beating the market over the next five years.
Costco stock price stood at $686.88
According to the latest long-term forecast, Costco price will hit $900 by the end of 2024 and then $1100 by the middle of 2026. Costco will rise to $1400 within the year of 2027, $1600 in 2029, $1700 in 2031, $1800 in 2032 and $2000 in 2034.
They Keep Changing Up Merchandise
While some Costco shoppers consider it a benefit to experience new and different merchandise every trip, some shoppers are frustrated that Costco doesn't always carry the same brands every month. Just when you start loving an item, it vanishes from store shelves.
Bill Gates Costco Wholesale Corp
The first Costco Wholesale trade was made in Q3 2002. Since then Bill Gates bought shares ten more times and sold shares on four occasions. The investor sold all their shares in Q4 2012 and doesn't own any shares in Costco Wholesale anymore.
The largest shareholders of Costco
According to Investopedia, Craig Jelinek is the largest shareholder in the company and also holds the roles of President and CEO. He owns 333,075 shares of the company, or about 0.08% of all shares. Charles Munger is second, owning 166,489 shares.
James D. Sinegal (born January 1, 1936) is an American billionaire businessman and the co-founder and former CEO of the Costco Wholesale Corporation, an international retail chain.
Is Costco in debt?
Total debt on the balance sheet as of August 2023 : $8.88 B
According to Costco's latest financial reports the company's total debt is $8.88 B.
COST Stock Forecast FAQ
Currently there's no upside potential for COST, based on the analysts' average price target. Is COST a Buy, Sell or Hold? Costco has a conensus rating of Strong Buy which is based on 21 buy ratings, 7 hold ratings and 0 sell ratings.
When is Costco dividend payment date? Costco's next dividend payment date is on Feb 16, 2024, when Costco shareholders who own COST shares before Feb 01, 2024 will receive a dividend payment of $1.02 per share. Add COST to your watchlist to be reminded of COST's next dividend payment.
Some of the highest wages a worker can make at Costco are in the job titles Registered Pharmacist ($136,000), and title Full Stack Software Engineer ($133,750) which are the highest paying jobs at Costco.
As of 2023, Costco is the third-largest retailer in the world and is the world's largest retailer of choice and prime beef, organic foods, rotisserie chicken, and wine as of 2016. Costco is ranked #11 on the Fortune 500 rankings of the largest United States corporations by total revenue. Seattle, Washington, U.S. U.S.
