So far in 2026, the S&P 500 index has fallen more than 3% (as of April 7). During the same time, shares of Costco Wholesale (COST 0.63%) have climbed 17%. The warehouse club operator, which has a stellar history of success, has been doing a wonderful job taking care of its investors in times of general market weakness.
This winning retail stock could be a screaming buy in the month of April -- but only if one thing happens.
Image source: The Motley Fool.
3 reasons why Costco is a great business
It's important for investors to first understand what makes Costco such a high-quality business. There are three factors that stand out.
The first is its ability to steadily grow its profits over time. Between fiscal 2015 and fiscal 2025 (ended Aug. 31, 2025), diluted earnings per share (EPS) increased at a compound annual rate of 13%. The company obviously benefits from being able to expand its base of warehouses, which provides higher revenue each year.
NASDAQ: COST
Key Data Points
Its wide economic moat is another reason this is a great company. With $68 billion in net sales in the 2026 second quarter (ended Feb. 15), it's the third biggest retailer in the world. But unlike its supermarket peers, Costco carries significantly fewer stock-keeping units. This gives it powerful negotiating leverage with suppliers, keeping costs constantly low for shoppers.
And third, the company has a loyal customer base. Low prices, a no-frills shopping environment, and quality merchandise drive foot traffic. With a renewal rate in the U.S. and Canada of 92.1%, the business is keeping its members satisfied.
Investors need to wait for the right opportunity
Costco shares have produced a total return of 670% in the past decade. And they've had a fast start to the year in 2026. But buying the stock isn't the right move right now.
The shares are a screaming buy in April only if their valuation comes down dramatically. They currently trade at a price-to-earnings ratio (P/E) of 52.9, an extremely expensive valuation that showcases just how optimistic the market is about the business. In other words, Costco has no room for error should it miss Wall Street analysts' sales or EPS estimates.
If the P/E multiple falls to 25 or lower, then the shares would be a no-brainer buy, in my opinion. But this is an unlikely scenario in April -- or perhaps ever. The last time the stock was trading at a P/E below 30, for example, was in 2019. Investors interested in Costco should be very patient.
