Costco Wholesale (COST 0.29%) is having a rare off year. It's a stock that almost always beats the market, and as you go back in time, the outperformance keeps getting wider. However, Costco stock is roughly flat this year, even as the S&P 500 index has soared 17%. Is this a great time to buy? Or a signal to stay away?
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Costco, the company, is unstoppable
Costco continues to enjoy robust growth, and its membership model provides reliable recurring revenue and profits. That hasn't changed recently despite inflation and tariff worries. In fact, Costco is one of those companies that does well during recessions, since it sells the essentials shoppers always need to buy at the lowest prices.
While its membership fee may deter some buyers, for customers who shop enough each year, it's more than worthwhile. This powerful model generates loyalty, high volume, and increasing sales.
NASDAQ: COST
Key Data Points
One thing that has changed recently is Costco's valuation. Its P/E ratio reached over 60 last year, and while Costco stock has always traded at a premium, that was already quite expensive. Now it's down to 50, which is still high.
Costco's model is changing, too, since it's expanding its e-commerce and digital presence. It now offers online sign-ups and renewals, and investors have been closely watching how this impacts the business.
It's unlikely that the stock is going to make any big moves before the end of the year, although it does report fiscal 2026 first-quarter earnings in December, which could affect the stock movement.
Long-term investors can see this as an attractive time to buy shares. Costco has many tailwinds and an excellent model that thrives under almost any circumstances.
