3 Reasons to Buy Costco Stock Like There’s No Tomorrow

Costco (NASDAQ: COST) has emerged as a retail titan, defying economic headwinds with its membership-driven model and omnichannel dominance. With its stock price nearing all-time highs, investors are asking: Is now the time to buy? Let’s break down three compelling reasons to say yes—and why this stock could keep climbing.

1. The Membership Model: A Recession-Proof Cash Machine

Costco’s core strength lies in its membership-driven revenue stream, which has proven resilient even in turbulent markets. Over 138.8 million cardholders (77.4 million paid households) generated $1.166 billion in membership fees in Q1 2025, up 7.4% year-over-year. These recurring fees—now $65 annually for standard members and $120 for Executive members—act as a buffer against margin pressures, allowing Costco to absorb cost increases without hiking prices.

Key Metrics:
- Membership renewal rates remain stellar: 93% in the U.S./Canada and 90.5% globally (Q1 2025).
- The recent membership fee hike (up $5 for standard, $10 for Executive) is projected to add $290 million to fiscal 2025 operating income.

2. E-Commerce Dominance: A Digital Future Already Here

Costco’s e-commerce arm is no afterthought—it’s a growth engine. In Q1 2025, online sales surged 13.2%, with average order values rising 8% and site traffic up 16%. The company’s focus on bulky, high-margin items (e.g., appliances, furniture) has given it an edge over Amazon, as its logistics network can handle deliveries of large, heavy goods efficiently.

Why This Matters:
- Warehouse inventory integration: The “Buy Online, Pick Up in Warehouse” (BOPIS) service now prioritizes appliances and electronics, driving a 28% year-over-year increase in delivery volume.
- Global expansion: E-commerce sites now operate in 8 countries, with plans to add more, capitalizing on rising demand for convenient bulk shopping.

3. Global Expansion: A Blueprint for Long-Term Growth

Costco isn’t just dominating the U.S. market—it’s aggressively expanding internationally. By fiscal 2025’s end, the company plans to open 29 new warehouses, including locations in high-growth regions like China, Japan, and Mexico.

The Numbers Tell the Story:
- International sales now account for 30% of total revenue, with markets like Canada, the U.K., and Australia showing double-digit growth.
- Warehouse efficiency: With 897 global locations as of Q1 2025, Costco continues to optimize its footprint, balancing urban and rural demand.

Stock Performance: Valuation vs. Value

While Costco’s stock trades at a P/E ratio of 55, far above the S&P 500’s 21x multiple, bulls argue this premium is justified. The median 12-month price target from analysts is $1,087.26—a 7.8% upside from current levels—and 24/7 Wall St. projects a $1,024.90 price by 2030, assuming steady growth.

Why Investors Should Look Past Valuation Concerns:
- Margin stability: Despite rising SG&A expenses, Costco maintains 3% merchandise margins, a razor-thin but consistent figure that underscores operational discipline.
- Dividend growth: A 12% dividend hike to $1.30 quarterly (yielding 0.47%) reinforces Costco’s reliability for income investors.

Conclusion: A Stock Built to Outlast

Costco’s trifecta of membership loyalty, e-commerce innovation, and global reach positions it to thrive in both boom and bust cycles. With a median analyst price target of $1,087 and a one-year upside of 7.8%, now is a critical time to consider buying—provided you’re willing to ride through potential volatility.

The risks? A valuation-driven pullback or a severe economic downturn could test its resilience. But with $10.9 billion in cash, a fortress balance sheet, and a track record of turning challenges (like tariffs) into opportunities, Costco isn’t just a stock—it’s a bet on the future of retail.

Investors who recognize Costco’s enduring value—and its ability to adapt—are the ones who’ll wonder why they didn’t buy sooner.