Costco’s Stock Surges: Is It Time to Buy or Hold?

SEATTLE, Wash. — Costco Wholesale Corp. has seen its stock skyrocket over the past decade, generating a remarkable total return of 731%. An investment of $10,000 made in late February 2015 would now be valued at more than $83,000, significantly outperforming the broader S&P 500 index.

As of March 5, 2025, Costco’s market capitalization hovers near $460 billion, just shy of the $500 billion mark. Despite a minor decrease of 0.35% recently, many investors are actively considering whether to buy, sell, or hold shares of the retailer, particularly in light of its impressive operational performance.

Costco’s fiscal 2024 results highlight the company’s robust sales, generating $250 billion in net sales for the year. This substantial revenue gives the retailer substantial negotiating power over suppliers, allowing it to maintain a slim profit margin between 12% and 13% to drive sales volume. “This cost advantage results in everyday low prices for consumers,” said an unnamed market analyst.

Customer loyalty also plays a crucial role in Costco’s success. The company has consistently demonstrated durable demand, even amidst economic fluctuations. Its unique membership model, which requires customers to pay annual fees for shopping privileges, has yielded impressive renewal rates and a reliable high-margin revenue stream. These membership fees bolster Costco’s ability to invest back into the business, which has seen net income rise by 258% over the past decade, outpacing its 126% revenue growth.

The company also rewards shareholders with a regular dividend, currently yielding 0.45%, and special one-time dividends, the most recent being $15 per share in January 2024. Despite its solid growth story, analysts caution potential investors about the steep price-to-earnings (P/E) ratio, which stands at approximately 61.

Because Costco is trading at one of its highest valuations since its public debut in 1985, some experts suggest a more cautious approach. One analyst remarked, “While Costco has a stellar track record of shareholder returns, the current P/E ratio leaves little room for error in future earnings. It might be wise to wait for a dip before investing.”

As the investment community weighs the pros and cons of Costco’s high stock price, the consensus remains optimistic about the company’s long-term growth potential, further emphasizing the need for careful market sentiment analysis before making investment decisions.