3 Reasons to Buy Costco Stock Amidst Market Uncertainty

Costco is a buy due to its winning consumer wallet share, differentiated membership business model, and expanding warehouse footprint. The company's monthly revenue reporting provides insight into its performance relative to other retailers. Its membership fees are a significant source of pre-tax income, and its warehouse expansion feeds into more members and higher-margin revenue.

Costco Wholesale Corp. (COST) has been a standout performer in the retail sector, with its differentiated membership business model and expanding warehouse footprint making it an attractive investment option. The company's monthly revenue reporting provides insight into its performance relative to other retailers, and its membership fees are a significant source of pre-tax income.

Winning Consumer Wallet Share

Costco's June sales results highlighted a 5.8% year-over-year increase in total company comparable sales, with regionally, comparable sales rising 4.7% in the United States, 6.7% in Canada, and 10.9% in Other International markets [2]. E-commerce also remained a bright spot, with comparable sales surging 11.5% [2]. This robust performance underscores the company's ability to attract and retain customers, as evidenced by its high renewal rate of 92.7% in key markets like the United States and Canada [2].

Differentiated Membership Business Model

Costco's membership model is a key differentiator in the retail landscape. Executive members, who pay $130 per year, enjoy several perks, including a 2% cash-back reward on most purchases and access to exclusive deals [1]. This model has proven successful, with executive memberships growing 9% to 37.6 million, now accounting for 47.3% of total paid members and 73.1% of global sales [2]. The company's disciplined focus on cost control, product mix optimization, and growing penetration of its private-label brand, Kirkland Signature, continues to support margin expansion [2].

Expanding Warehouse Footprint

Costco's expanding warehouse footprint is another key driver of its growth. The company opened nine warehouses during the third quarter of fiscal 2025, including seven in the United States, one in Japan, and a relocation in Australia, and plans to open 10 more in the final quarter [2]. This expansion feeds into more members and higher-margin revenue, as well as a more integrated omnichannel shopping experience [2].

Valuation and Future Outlook

Costco stock has been a standout performer, with shares rallying 13.4% over the past year, outpacing the industry's growth of 6.1% [2]. The company's high valuation, with a forward 12-month price-to-earnings ratio of 48.33, may be justified given its consistent performance, loyal customer base, and solid business model [2]. However, the stock trades at a premium to its industry peers, and some analysts suggest that the current valuation may warrant patience for a more attractive entry point [2].

Conclusion

Costco's winning consumer wallet share, differentiated membership business model, and expanding warehouse footprint make it a strong buy amidst the retail landscape. The company's monthly revenue reporting provides insight into its performance, and its membership fees are a significant source of pre-tax income. While the stock trades at a premium valuation, this appears justified given its operational resilience, expanding global footprint, and loyal customer base. For long-term investors willing to pay up for quality and stability, Costco remains a compelling choice.

References

[1] Frankie Calkins. (2025). "Is the Costco Executive Membership Finally Worth It?" Medium. Retrieved from https://medium.com/money-resolution/is-the-costco-executive-membership-finally-worth-it-6af3f25a6b68

[2] Zacks Investment Research. (2025). "Zacks Analyst Blog Highlights Costco." Yahoo Finance. Retrieved from https://finance.yahoo.com/news/zacks-analyst-blog-highlights-costco-134700958.html