Costco Keeps Growing Its Business — Is It Time To Buy the Stock?
Written by
Vance Cariaga
Edited by
Jenna Klaverweiden
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Costco didn’t become the nation’s biggest warehouse club by thinking small or playing it safe, and the chain has no plans to start now. Rather than sit on its lead against chief rivals Sam’s Club and BJ’s Wholesale Club, Costco aims to aggressively expand its footprint in the U.S. and internationally — and much of Wall Street has given the stock its blessing.
So with Costco continuing to grow its business, is it a good time to buy the stock?
Costco Is Growing
In September, Costco announced plans to open 29 locations during the 2025 fiscal year, including 26 brand-new warehouses and three relocations of existing warehouses. A dozen of the new locations will be in global markets. That follows the 30 locations Costco opened in fiscal 2024, which ended on Sept. 1.
The new stores will add to what is already a big operation. As of early December, Costco operated a total of 897 warehouses. The vast majority — 617 — are in the United States and Puerto Rico. But Costco also has 109 in Canada, 41 in Mexico, 36 in Japan, 29 in the U.K., 19 in South Korea, 15 in Australia and 14 in Taiwan. The rest are scattered among China, Spain, France, Iceland, New Zealand and Sweden. Costco also operates e-commerce sites on four continents.
Strong Financials
While aggressive expansion plans sometimes make investors nervous, that’s clearly not the case with Costco. Its stock price traded at a 52-week high of $1,008 in mid-December. Though shares have since fallen back to around $910, they’re still up by about 41% over the past year. Many analysts rate the stock a “Buy” — a sign that they expect it to keep pushing higher. This usually means it’s a good time to buy the stock.
One of Costco’s main advantages is it’s the biggest dog in what is essentially a three-dog race — with very high barriers to entry. Costco had a 62% share of the U.S. warehouse club market as of 2022, according to CFRA Research data cited by Produce Blue Book. Walmart-owned Sam’s Club was next at 31%, followed by BJ’s at 7%.
Costco has also endeared itself to Wall Street with its winner-take-all expansion mentality and strong financials. The company reported a 3.4% gain in U.S. comparable sales for the four weeks ended Dec. 1, helped by a strong Black Friday performance. Comparable sales in Canada rose 3.7%, while those in other international markets climbed 1.3%.
Such robust organic sales growth is not an easy thing to pull off for a company as big as Costco, which logged about $250 billion in fiscal 2024 net sales. But Costco keeps beating the odds because it does so many things well, analysts say.
“Costco’s resilient business model, centered around a membership-based structure, continues to be a major growth driver,” Zacks noted in a Dec. 5 report. “The company’s high membership renewal rates, coupled with its efficient supply chain management and bulk purchasing power, ensure competitive pricing and customer loyalty.”
Membership fees are an important part of Costco’s story because they generate more than half of its profits. In 2024, the company announced that it would hike its fees for the first time in seven years. Gold Star and Business membership fees were both bumped to $65 a year from $60 previously, while Executive Membership fees rose to $130 from $120 a year.
Analysts will keep a close watch on how the raised fees impact Costco’s financial results, if at all. They’ll also keep an eye on the company’s e-commerce business, which has lately been a drag on overall results.
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