In the 12-month period leading up to its peak in February 2025, shares of Costco (COST +1.23%) produced a wonderful total return of 52%. But market sentiment has shifted somewhat. And as of Jan. 15, this retail stock trades 11% below its all-time record.
Investors are certainly eyeing this high-quality business to buy on the dip. But can Costco reach $1,000 before 2026 is over? Here are the factors investors must consider.
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Looking at the possibility of a 5% gain
For the stock to reach the four-figure mark later this year, it would need to rise just 5% from the current price of $954. That seems like a very easy bar to clear. In the past 10 years, Costco's stock price has climbed at a compound annual rate of 20%.
The hypothetical 5% gain also comes up short of the overall market's trend. Throughout history, the S&P 500 index has registered an average total return of 10% on an annualized basis.
Sell-side analysts adopt an upbeat perspective. Costco has a consensus price target of $1,033 one year from now, implying 8% upside. Because of the stock's long-term performance, this gain is certainly possible.
Financial gains provide a persistent tailwind
Companies that report strong fundamental gains benefit from an important tailwind to stock gains. Costco excels here. It just revealed that same-store sales (SSS) rose 7% in December 2025. This burst was after SSS climbed 5.9% in fiscal 2025 and 5.3% in fiscal 2024.
Costco's impressive value proposition keeps customers locked in and attracts new ones. It has 81.4 million membership accounts, a figure that was up 5.2% from the same period a year before.
Of course, factors outside of Costco's control could get in the way of the stock rising. For example, if there is a severe recession in the U.S. and other countries Costco operates in, consumer spending could sharply contract, resulting in lower foot traffic to warehouses and pressured demand for the merchandise Costco sells. Bullish investors don't want to see this happen.
I view this as a low probability scenario. The Federal Reserve is now in a rate-cutting cycle. And it just started quantitative easing for the first time since March 2022. These moves provide stimulus to the economy.
And Costco has proven to be a steady performer in any weather. By focusing on selling goods at extremely low prices, it is a staple in the budget of its typical membership households. These people will still need the items that Costco offers, even if there's an economic downturn.
For what it's worth, Wall Street analysts (based on the consensus view) forecast revenue and earnings per share to increase 8% and 11%, respectively, between fiscal 2025 and fiscal 2026. Given the predictable nature of this company, I think this outlook is in the right ballpark for what will ultimately happen.
NASDAQ: COST
Key Data Points
The market places a premium on this business
The stock trades at a steep price-to-earnings (P/E) ratio of 51. It seems the market always places a premium valuation on Costco. And why wouldn't the investment community view this business highly?
Costco is a leader in the massive retail sector, with strong brand recognition and a cost advantage. It keeps expanding the store base, which supports higher sales and earnings down the road. Yes, it faces competition. But it continues to perform well even as online shopping takes a larger share of overall industry activity.
I don't believe this is a worthy investment candidate right now. Revenue and profit growth can be key tailwinds. However, Costco's valuation is too rich. Understanding that this is a notable headwind, it still wouldn't surprise me at all to see the share price increase 5% to reach $1,000 by the end of 2026.
