Costco Wholesale (COST -0.33%) stock has been on an absolute tear over the last five years, jumping by more than 100% in five years due to its growing popularity and booming membership model. It is already one of the most valuable retailers in the world, but an interesting valuation race is hiding in plain sight.
As of Aug. 31, The Home Depot (HD +0.60%) was worth about $327 billion, and Lowe's Companies (LOW +1.03%) was worth about $115 billion. That gives the country's two largest home-improvement retailers a combined market cap of $442 billion.
Costco, by comparison, was worth about $417 billion in July and August. That means Costco is only about $25 billion away from surpassing the combined market cap of these two companies. The question is whether Costco can close that gap by 2030. I think it can, and I think it can do so easily.
NASDAQ: COST
Key Data Points
Costco has a business that people keep coming back to
The first thing investors should understand about Costco is that its membership model changes the economics of retail. Customers pay Costco before they buy anything. In the U.S., a Gold Star membership costs $65 per year, while an Executive membership costs $130 per year. This year, the company raised those prices across about 52 million memberships, with a little more than half of them in the Executive tier.
That is important because Costco does not have to convince every customer to become profitable on every individual transaction. It first needs to convince customers that the membership is worth renewing. Then it gets the shopping relationship.
Most of the products Costco sells are not niche purchases. People need groceries, household supplies, toiletries, appliances, and other everyday goods. They also need gasoline. Costco operates gas stations at many of its stores in several of its major international markets, giving members another reason to visit its warehouses.
That creates an interesting loop. A member may join for bulk prices on groceries, stop for gasoline on the way home, buy something from Kirkland Signature, and eventually (down the road) decide that the pricier Executive membership makes sense because of the rewards. It's clear that Costco is a habit business.
Image source: Getty Images.
The numbers show the habit is getting bigger
Costco's results so far in its fiscal 2026 offer evidence that this model still has room to expand.
Through the first 36 weeks of fiscal 2026, Costco generated $4.06 billion in membership-fee revenue, up from $3.60 billion in the prior-year period. Net sales increased by 9.6% year over year, and the company grew to 931 warehouses worldwide.
I would pay more attention to the warehouse count and membership engine than to any single quarter's earnings. Costco is still opening stores while maintaining a business model that encourages customers to spend more in those stores.
The company also has a private-label engine in Kirkland Signature. Costco says its private-label products are designed to offer quality equal to or better than national brands while maintaining lower prices. That gives Costco another sales lever. It can give members a reason to buy more products while creating an assortment that customers cannot find elsewhere.
NYSE: HD
Key Data Points
Here's the 2030 math
Let's keep the prediction conservative. Costco does not need to double from here.
If its market value compounds at 6% per year for four years, a roughly $417 billion company would be worth about $526 billion by 2030.
Now consider Home Depot and Lowe's. If their combined market value grows at 4% a year, the roughly $442 billion starting point becomes about $517 billion. Costco would win by roughly $9 billion.
If Costco's growth compounds at 7% annually, it reaches about $546 billion, while the two home-improvement stocks at 4% reach about $517 billion. The gap becomes nearly $30 billion.
That is why I find this prediction more interesting than it first appears. Costco does not need some huge new business to pull this off. It simply needs to keep doing what it has already shown it can do: add warehouses, attract new members, increase spending per member, and give customers reasons to return.
NYSE: LOW
Key Data Points
There is also the risk of valuation
Costco stock is already priced in a way that shows investors expect a lot from the business. If its growth slows and the market decides that Costco deserves a lower valuation multiple, strong operating performance may not translate into the same stock returns.
Home Depot and Lowe's also have legitimate paths to growth. Home improvement sales are tied to housing, renovations, and the enormous installed base of American homes. That said, I think the U.S. housing market overall could take a meaningful dip over the next four years, while tight household budgets may push homeowners to delay renovations and put off repairs. I know that's the case for me and my household; we are pinching pennies and not doing as many home projects.
Costco's market cap is only about $25 billion behind two companies that together are worth more than $440 billion. If Costco can compound its value at a mid-single-digit percentage rate while Home Depot and Lowe's grow more slowly, the math gives Costco a realistic path to surpass their combined value by 2030.
