Costco (COST 1.15%) has come a long way since starting out as one of the world's first retail warehouse clubs in 1983. Back then, the company called itself Price Club and was based in San Diego, California. The retail giant went public only two years later, in 1985, and the rest is history.
Shares of Costco have soared 89,000% since its initial public offering, creating plenty of millionaires along the way. The company has attracted millions of consumers with its unique business model of offering annual subscriptions for access to a range of quality products at wholesale pricing.
There's plenty to be bullish about in Costco's long-term future. The company consistently outperformed its retail peers in stock growth, and has massive growth potential abroad. Here's why Costco could help you become a millionaire.
Consistent long-term growth
One of the most attractive aspects of Costco's business is its proven reliability.
The company's subscription-based model makes it less vulnerable to macroeconomic headwinds, a strategy that fellow retail giant Amazon has successfully employed with its Prime membership. As a result, Costco can be less concerned with product sales and instead prioritize consumer brand loyalty and satisfaction.
Data by YCharts
Costco's success has seen its financials skyrocket over the last five years, with its annual revenue, operating income, and free cash flow delivering double-digit growth. And in that time, the company's share price has climbed 222%.
Past growth isn't always an indication of what's to come, but a gradual expansion abroad and a membership renewal rate of more than 90% worldwide suggest the company still has plenty of room left to run.
Its international expansion is only just getting started
As of this writing, Costco has 876 locations across 14 countries, with 69% of those stores in the U.S. However, the company is rapidly expanding abroad. Toward the end of last year, CEO Richard Galanti announced the company plans to open 31 new stores in 2024 and open a similar number of stores every year, divided equally between the U.S. and overseas.
The expansion plans are promising, as the company has barely scratched the surface of its potential abroad. Costco has six or fewer locations in six countries, representing massive growth potential. And that's before considering all the countries the company has yet to enter.
For instance, China could be a major growth market. Costco opened its first location in the country in 2019, with excited shoppers showing up in droves and causing the store to close early due to overcrowding on the first day. COVID-19 held up the opening of more locations for a few years, but the success of the first store saw the company finally add four new stores in the East Asian country in 2023 and one in 2024 for a total of six in China.
Moreover, international revenue is outpacing domestic sales. In the second quarter of 2024 (ending February 2024), U.S. revenue increased by 5% year over year, while revenue from Canada rose 9% and other international sales popped 9%.
Costco's business has successfully traversed dozens of nations and cultures, winning over millions of consumers. The company's stock has delivered triple-digit growth over the last five years, and I wouldn't bet against it replicating those gains over the next half-decade as it continues to expand abroad.
Meanwhile, an 18% jump in e-commerce revenue in its latest quarter only strengthens Costco's outlook as it seeks other growth opportunities.
Costco is one of the best ways to invest in retail
Costco's more than 200% stock growth since 2019 far exceeds that of many of its peers in the retail market, and even rivals some tech giants.
Data by YCharts
The chart above shows Costco's stock price has exceeded those of many of its biggest rivals over the last five years, delivering more growth than Target, Walmart, or Amazon.
In addition to an attractive price-to-sales ratio of 1, which indicates its stock is trading at a bargain, Costco is a no-brainer and one that could make you a millionaire over the long term.
