You've likely seen a packed parking lot if you’ve driven past a Costco anytime in the last few months. Wholesale companies like Costco expanded their popularity during the pandemic, and consumers continued to rely on them when grocery prices inflated in the aftermath. Investors were also rewarded as COST shares have doubled in the last 24 months, but how much growth can the company maintain? Read our Costco stock price forecast to learn where the share price might be headed next.
Current Overview of Costco Stock
Costco Wholesale Corp. (NASDAQ: COST) is one of the largest publicly traded warehouse club chains, with stores in 14 countries and a loyal customer base that pays annual membership fees for the right to shop. Unlike traditional retailers like Walmart Inc. (NYSE: WMT) or Target Corp. (NYSE: TGT), Costco focuses on a lean inventory model with private label brands and lower markups. Customers have less selection, but the company can offer lower prices while maintaining its margins.
Costco is the driving force in the warehouse club sector compared to its peers. The firm holds over 60% market share amongst club shoppers and pulls in triple the annual revenue of its stiffest competition, Walmart-owned Sam’s Club.
The company has been a darling of the stock market since the early days of the pandemic and now boasts a daily trading volume of more than 1.6 million shares on average. With a P/E ratio of 56.75, COST is more expensive to own than WMT or TGT, but investors have been willing to accept that so far and have boosted the company’s market cap to over $400 billion. Despite the high P/E ratio, the stock’s beta is just 0.79, indicating the shares are 21% less volatile than the S&P 500.
Methodology for Stock Price Prediction
Costco operates on a low-margin, high-volume business model, so various factors, including financial performance, industry trends and short-term technical trading signals, influence its stock price. Here’s what we used in our analysis of COST shares:
Financial Performance
- Revenue growth: Consistent sales growth is a crucial driver of stock price appreciation. For Costco, this includes sales growth along with membership growth and retention.
- Profit margins: Maintaining profitability despite inflationary pressures and competitive threats in an industry where margins are notoriously slim.
- Cost of goods sold (COGS): Efficient inventory management and strong supplier relationships can impact margins. Costco relies on these factors to keep costs down and maintain its customer-friendly markups.
Industry Trends
- E-commerce competition: The increasing popularity of online shopping can affect foot traffic and sales. Costco is building a solid web presence but lags compared to competitors like Walmart or Amazon Inc. (NASDAQ: AMZN).
- Competitive landscape: Direct competitors like BJ’s Wholesale Club Holdings (NYSE: BJ) can impact market share, pricing strategies and changing consumer attitudes and economic sentiment.
Technical Analysis
- Moving averages: Can be used as short- or long-term trend indicators. A bullish crossover occurs when the 50-day MA exceeds the 200-day MA, which could signal upside ahead. The 200-day MA often serves as a significant support or resistance level.
- Relative strength index (RSI): This index measures the speed and change of price movements. High RSI values (overbought) and low values (oversold) can signal potential reversals.
- Chart patterns: Analysts identify patterns like head and shoulders, double tops/bottoms and triangles to predict future price movements.
By carefully analyzing these factors, equity analysis firms can make informed predictions about COST's stock price and provide valuable insights to investors.
Costco Stock Price Prediction for 2024
COST stock has been a powerhouse in 2024, up more than 34% so far year-to-date and 22% alone in the last six months. The share price hovers around the 50-day moving average of $892 and well above the 200-day moving average of $803, indicating the bullish uptrend seems to remain firmly intact.
Additionally, the stock’s RSI reads 56, signaling that shares are yet to reach Oversold status, where a pullback could be anticipated. If current trends continue, it could be possible to see the stock price close in on the $1,000 mark as 2024 draws to a close.
Costco Stock Price Prediction for 2025
According to a Benzinga review of analyst coverage, 25 different equity research firms currently cover COST shares, and the overall viewpoint on the company is primarily optimistic. The average price target amongst the assorted reports is $927 (representing 5% upside), and the consensus rating is a Hold.
However, a rosier picture emerges if we look at the most recent analyst upgrades from October. Since October 10, three different firms (Bernstein, Tigress Financial, Telsey Advisory Group) have reiterated the stock a Buy and upped their price targets to $1,000, $1,016 and $1,065, respectively. These more optimistic targets represent an upside of 10% or more, so investors should closely watch future analyst updates and company catalysts.
Costco Stock Price Prediction for 2030
Costco is well-positioned to maintain its market share in the warehouse club niche, but the rich valuation may give some investors pause when considering a long-term commitment. Developing a more substantial online footprint is an initiative for the company. However, its supplier relationships enable it to offer wholesale prices while maintaining higher profit margins than bigger competitors like Walmart. Can Costco crack the $2,000 mark by 2030? It’ll require massive yearly gains, minimal drawdowns and continued growth in e-commerce and international markets.
Is Costco Stock Right For You?
Costco’s stock has grown quickly despite residing in a sector not known for meteoric growth. The volatile share, high P/E ratio and low margins may give cautious investors pause, but COST is showing enough strength to be a solid addition to a diversified stock portfolio. Its customers are supremely loyal (over 90% membership renewals), and the business model keeps inventory light and affordable. Recent analyst estimates indicate an upside potential of 10% but consult your advisor before adding a significant individual stock investment to your portfolio.
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Frequently Asked Questions
What will Costco stock be worth in 2025?
The average price target amongst all 25 analysts in Benzinga’s database is $927, but the most recent reports list the stock’s price target over $1,000.
Is Costco a buy, hold or sell?
COST is rated a Hold based on the consensus view. However, the most recent research is more optimistic and several equity analysis firms have upgraded their ratings to Buy.
Does Costco have a future?
COST may have a bright future, but gaining another 100% in two years is unlikely. Investors must reset expectations and not consider Costco stock as a high-risk, high-reward asset.
* Plus500 is a Benzinga Partner and the promotion of this offer was sponsored by the Partner. This does not impact the content at all.
About Dan Schmidt
Dan Schmidt is a finance writer passionate about helping readers understand how assets and markets work. He has over six years of writing experience, focused on stocks. His work has been published by Vanguard, Capital One, PenFed Credit Union, MarketBeat, and Fora Financial. Dan lives in Bucks County, PA with his wife and enjoys summers at Citizens Bank Park cheering on the Phillies.