The market is on edge year to date, to say the least. As of this writing, the S&P 500's return so far in 2026 is about flat. But that stat doesn't show the carnage in some corners of the market. Many software-as-a-service stocks, for instance, have been crushed. In recent trading days, the market seems to be losing its appetite for riskier growth stocks and is instead turning to steadier, more durable companies like Costco (COST +1.14%).
Shares of membership-based wholesale retailer Costco have risen about 15% year to date, crushing the market, as investors appreciate the company's ability to consistently grow in just about any environment. Its combination of low prices, a membership model, and a large share of sales from everyday essentials that keep its members coming back exemplifies the type of business investors appreciate during periods of uncertainty.
Is the stock's momentum in 2026 just the start? Or, put another way, is Costco stock a buy today?
Image source: Getty Images.
Steady sales growth
Earlier this week, Costco gave investors another glimpse into its sales momentum. Per usual, it's impressive. Sales for its retail month of January rose 9.3% year over year. These sales were fueled by a 7.1% increase in same-store sales, or sales growth at stores open for more than a year. Excluding the impact of changes in gasoline prices and foreign exchange, Costco's same-store sales rose 6.4% year over year.
Importantly, Costco's adjusted same-store sales growth for the period accelerated from 6.2% growth in December. But investors should keep in mind that the month could have benefited from severe winter storms that swept over the U.S. during the period. Still, the point is that Costco's sales growth remains both robust and steady.
Perhaps even more exciting was the company's growth in digitally enabled sales, which Costco defines in its annual report as "sales delivered to members that are initiated through a digital device, whether fulfilled through a warehouse or distribution center," as well as sales made through its Costco Travel platform.
These sales have become increasingly important to Costco. The company disclosed in its 2025 annual report that these digital sales now account for 10% of the company's overall revenue.
When adjusted for gasoline prices and foreign exchange, Costco's January digitally enabled sales rose 33.1% year over year -- a significant acceleration from 18.3% growth in December.
This strong growth in Costco's digitally enabled sales shows that the company's recent efforts to drive greater digital engagement are working. As one example of how it's doing this, a key initiative the company implemented last summer was the addition of a $10 monthly credit toward a Costco delivery order, available on its own same-day Costco website or via Instacart in the U.S. and Canada (in some markets, the partnership is with DoorDash and/or Uber).
All of this builds on a steady drumbeat of sales for years. Even with tough comparisons when sales at Costco grew at abnormally high double-digit rates during COVID in both fiscal 2021 and fiscal 2022, sales growth has remained strong since. Sales in fiscal 2023, 2024, and 2025 rose 7%, 5%, and 8%, respectively.
1 reason to avoid the stock
Despite the company's ability to consistently grow sales, I don't think the stock is a buy today -- especially after its 15% year-to-date gain. Why?
Valuation.
No matter how great a business is, a valuation that has gone too far leads to significant valuation risk, or the possibility of a stock's valuation getting rerated lower. In fact, I'd argue that valuation risk is sometimes riskier than business-specific risk, as a stock's valuation can get rerated lower even if the business is doing well.
With shares trading at a price-to-earnings ratio of 53 as of this writing, the current valuation arguably prices in strong earnings-per-share growth of around 15% annually for years to come. Yet Costco's earnings per share rose just 10% in fiscal 2025.
All of this to say, Costco is a great business. But at its current price, I don't think it's a great stock.
