Costco Wholesale (COST +1.24%) has outperformed the S&P 500 by a wide margin over a long period of time, but even some of the best stocks have off years, and Costco stock barely moved last year.
However, the market seems to have remembered it now, and it's off to an incredible start in 2026, up 13% in January as of this writing.
If you didn't manage to buy it on the low, is it too late to buy now?
Image source: Getty Images.
The evergreen membership model
Costco has a fee-based membership model that attracts customers looking for rock-bottom pricing. Customers renew their memberships at high rates, and the company typically reports high growth and robust profitability.
In the 2026 fiscal first quarter (ended Nov. 23), sales increased 8.2% year over year, with comparable sales up 6.4%. Digitally enabled sales increased 20.5%, and earnings per share rose from $4.04 to $4.50.
In the U.S. and Canada, its renewal rate was 92.2%, while worldwide it was 89.7%, and paid memberships increased 5.2% to 81.4 million.
The company has been upgrading its model to change with current trends, including adding self-checkout options and online registrations and renewals. While a standard e-commerce model doesn't work well with its huge warehouses and bulky and expensive items, it does offer grocery delivery through a partnership with Instacart (CART +1.68%), and it has a growing curbside pickup business.
Costco is one of few public companies that provide a monthly update, and the market was impressed with the outstanding December results, leading to the price spike. Sales increased 8.5% year over year, and comparable sales were up 7%.
NASDAQ: COST
Key Data Points
Costco stock is expensive again
Costco stock has always been fairly expensive, and investors justify that premium by noting the company's reliable growth model. However, the valuation hit new highs last year, with a P/E ratio above 60. That's high-growth-stock territory, and as reliable as Costco has been, it was a setup for a fall. Indeed, the market didn't feel that the stock warranted that valuation last year.
Now it's starting to creep up again, trading at 52 times trailing-12-month earnings, which makes Costco stock look less appetizing, despite all of its wonderful qualities.
If you plan to buy and hold for many years, you may want to use a dollar-cost averaging strategy to buy shares today but benefit from more attractive price points. Costco is likely to reward investors over the long term.
