Investing in the stock market is best with a long-term mindset, as doing so can safeguard your holdings from temporary headwinds. As a result, growth stocks can be your best friend with their history of solid gains over extended periods of time.
While companies like Apple and Amazon are often touted as must-buy growth stocks, going for lesser-known options can be a great way to diversify your portfolio. For instance, retailer Costco Wholesale (COST 1.01%), known for its membership-only chain stores and low prices, has done very well for investors.
The company's annual revenue has grown over 60% in the last five years, while operating income has climbed 74% despite the COVID-19 pandemic and recent economic challenges. Its unique business has won people over worldwide, with plenty of room for growth ahead.
Here's why this is one under-the-radar growth stock to buy in June.
Winning over customers worldwide
Costco's business model has proven itself time and time again, with the company now operating in 14 countries. Its warehouse-style, big-box stores have managed to transcend culture and geographic location, expanding to China, Sweden, and New Zealand in the first quarter of 2023. In fact, Costco boasts a membership renewal rate of 91% in the U.S. and Canada and 88% internationally.
The company opened its first store in France in 2017. This is a part of the world where you can still find many people heading to the local bakery every morning and where independently owned stores play a significant role in commerce.
As a result, Costco's arrival in the country didn't come without skepticism. After all, who could forget the massive protests that came with Walt Disney's Disneyland Paris opening in 1992? France has been loudly apprehensive of foreign brands in the past, so Costco's first location was merely testing the waters.
However, Costco received a much warmer reception in France than Disney did. The retailer hit over 160,000 French memberships in 2021, prompting it to open a second location in 2022. It has plans to build 15 more stores in the country by 2025. The company's success in France suggests it has vast expansion potential around the world.
Costco's international revenue rose 67% from 2017 to 2021, reaching $27 billion. Yet, the wholesale company has barely scratched the surface in many of the countries where it now operates, with massive growth opportunities available.
A history of consistent growth
Costco shares have soared 158% in the last five years and 367% over the last decade. The company's consistent development has led its stock make larger gains over the last five years than many of its biggest competitors, as seen in the chart below.
Data by YCharts
Costco's history of reliable gains has led to loyalty from investors who believe in its long-term performance. For instance, second-quarter 2023 saw the company report revenue of $55 billion, missing analysts' expectations by $340 million. The lean quarter was primarily the result of macroeconomic headwinds catching up with the big-box retailer.
While the miss would likely trigger a sell-off for other companies, Costco's stock has actually risen 4% since its earnings release on March 2 as investors bet on its long-term growth.
Costco is growing where it counts by providing investors with 18 consecutive years of dividend growth. The steady rise proves the company is home to a stable and financially expanding business. Costco's dividend yield is on the meager side at 0.8%.
However, it sporadically releases special dividends, most recently paying $10 per share in December 2020. This is when a long-term perspective is crucial with growth stocks as Costco's quarterly dividend has climbed 229% in the last 10 years -- it hit $1.02 this year.
Costco has a business that has been consistently embraced around the world, with big growth opportunities ahead. With its history of reliable gains, Costco stock is an under-the-radar growth stock worth considering this month.
