Costco Stock Has Risen Nearly 37% in 2021, Outperforming Competitors — Is It Worth an Investment?

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Shares of Costco pushed higher early Monday to continue a months-long runup for the warehouse club, which has been outperforming its rivals and earning buy recommendations from most analysts.

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Costco’s stock price is up about 6% in November and currently trades near $521 — much higher than rival BJ’s Wholesale Club, which trades near $62; and even Sam’s Club parent Walmart, which trades near $148.

So with such a high stock price, is Costco worth purchasing right now?

The majority of analysts who cover Costco seem to think so. Eighteen of the 29 analysts who follow the stock have either a “buy” or “strong” buy rating on it, according to Yahoo Finance. Eleven have a hold rating. Zack’s has a “strong buy” rating. For fiscal year 2022, 12 analysts have revised their earnings estimates higher over the last 60 days, Nasdaq reported.

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Shares of Costco have risen about 37% for the year, which is above the S&P 500’s 24.7% gain. A strong financial performance has helped.

In September, Costco logged fiscal fourth-quarter earnings of $3.76 a share, up from $3.13 the prior year. Revenue rose 17.5% to $62.7 billion. Both easily topped consensus analyst estimates. Same-store sales climbed 15.5%, year-over-year, while comparable e-commerce sales increased 11.2%. Meanwhile, the company’s app has passed 10 million downloads.

The main challenge now is navigating the same supply-chain and inflation issues that have plagued the entire retail industry.

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On a conference call with analysts, Costco Chief Operating Officer Richard Galanti said “port delays, container shortages, COVID disruptions, shortages on various components, raw materials and ingredients, labor cost pressures and (truck) and driver shortages” have all impacted the company’s business.

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About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.

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