In addition to Walmart and Amazon, Costco Wholesale (COST +1.10%) is one of the leading businesses in the retail sector. It has a global presence with over 900 warehouses in total. And the company has been a great portfolio addition for shareholders.
If you bought $100 worth of this retail stock 10 years ago, how much would you have today?
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In the past 10 years, Costco has produced a total return of 682% (as of Jan. 27). This means that a $100 starting investment would be worth $782 today. This is a wonderful gain that is much better than what the S&P 500 index would have returned.
It shouldn't be surprising that Costco's investment gains have been driven by strong fundamental performance. The company has far more warehouses today than it did a decade ago, which has resulted in increasing merchandise sales and a much bigger membership base of loyal customers. Consequently, Costco is registering much higher net income these days.
NASDAQ: COST
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But investors shouldn't rush to buy the stock just yet. Costco is an expensive investment opportunity today, with shares trading at a price-to-earnings ratio of 52. The best move is to wait for a sizable pullback before even thinking about adding Costco to your portfolio.
