Costco Wholesale (COST +1.18%) might not operate in an industry that's at the forefront of technological disruption, but that doesn't mean it hasn't taken care of its investors. The share price is up a stellar 170% in the past five years (as of Jan. 26). Thanks to the company's dominant position in the retail sector, it sports a market cap of $434 billion today.
Costco bulls have their eyes on a bigger prize. Can this unstoppable stock join the $1 trillion club in five years?
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The fundamentals are in great shape
Five years from now, there's no doubt in my mind that Costco will be a bigger business. It will have a much larger physical footprint, both here in the U.S. and in various foreign markets. Management's annual net store openings fall within the range of 25 to 30 warehouses. This leads to more revenue being generated.
It also helps the top line that Costco consistently posts same-store sales (SSS) growth, regardless of what the macroeconomic backdrop might suggest. At a time when consumer confidence has taken a hit, the business continues to hum along. During the fiscal 2026 first quarter (ended Nov. 23), SSS increased by 6.4%. And they were up another 7% in December.
Costco's net income climbed 102% between fiscal 2020 and fiscal 2025. It's likely that the gains over the next five years will be strong. In addition to its already loyal customer base, the company keeps adding new membership accounts each quarter. This supports more spending activity at its stores.
NASDAQ: COST
Key Data Points
Run the numbers
There are currently only 11 companies in the trillion-dollar club. Except for two, they all have heavy exposure to the technology sector. Costco's entry into this exclusive group would add some diversity to the mix. However, it's almost a certainty that Walmart, whose market cap is $938 billion, will be a part of the 13-figure family before Costco.
Costco's market cap would need to rise by 129% between now and late January 2031. In the past five years, its market cap expanded by 172%. Based on historical trends, this looks like a realistic outcome.
But there's one problem: Costco's valuation remains sky-high, with shares trading at a price-to-earnings ratio of 52.7. That's about double the S&P 500's multiple. I think there's a very good chance that the stock's valuation ratio comes down over the next five years, which will pressure the tailwind that ongoing earnings growth will provide.
A more probable scenario is Costco joining the $1 trillion club in 10 years.
