Costco Wholesale (COST 0.48%) has always been an excellent retailer, and the coronavirus pandemic only added to its position in the industry. Still, I am not buying Costco stock.

While the company has performed incredibly well in the middle of a challenging operating environment, that has been no secret to the market. Investors have piled into Costco stock, making it one of the most expensive among its rivals.

Moreover, Costco's earnings in its most recently completed fiscal year were significantly higher than usual, buoyed by the advantages it gained at the onset of the COVID-19 outbreak, creating a risk that earnings will pull back in the next few years. 

Costco is arguably at peak performance

Indeed, Costco's revenue growth in its fiscal 2021 was 17.5%. To put that figure into context, consider that it grew revenue at a compound annual rate of 8.2% over the last decade. Costco benefited as non-essential businesses were faced with more significant restrictions. Consumers with fewer choices on where to spend their money allocated a more substantial share to Costco.

Moreover, the company's earnings per share soared by 24.9% in fiscal 2021, to their highest level in the last decade. I don't expect this trend to be long-lasting.

COST Revenue (Annual YoY Growth) Chart

COST Revenue (Annual YoY Growth) data by YCharts

Anecdotal evidence suggests consumers are shifting their spending toward away-from-home experiences like travel, restaurants, and concerts. The economic reopening unleashes pent-up demand for these things that folks were kept away from for the better part of two years. Costco rivals Walmart and Target have noted that inventories are piling up as their customers have rapidly diverted spending from the types of things they were buying during the initial stages of the pandemic. 

To make matters worse, purchasing power is falling among consumers. The calendar years 2020 and 2021 consisted of several rounds of fiscal spending legislation, including boosted unemployment benefits, child tax credits, and stimulus checks. That gave consumers unprecedented spending power. Arguably, it has also led to rising inflation, making it more likely that governments will impose austerity measures soon. 

Costco is the most expensive of the bunch 

WMT PE Ratio Chart

WMT PE Ratio data by YCharts

Costco is the most expensive retailer among its peer group of Walmart and Target. Trading at a price-to-earnings (P/E) ratio of 39, Costco is more than three times as expensive as Target's P/E of 12, according to that metric. Similarly, it trades at a premium to Walmart's P/E of 27. 

Overall, retail stocks are not where I want to invest as consumer purchasing power is decreasing and diverting to other areas. I especially do not want to pay a significant premium to purchase Costco over Walmart or Target. I prefer to wait for earnings to normalize following the pandemic boost and then pay a reasonable premium over rivals.