The article argues that patient long-term investors have been rewarded by Costco, whose share price gained 104.2% over the past five years through Oct. 27, versus 69% for the S&P 500. In the latest fiscal year, which ended in late August, Costco kept a renewal rate of almost 90%, grew paid members about 4% to 84.1 million, and opened 25 warehouses, bringing its total to 939. Operating income rose 12.5% year over year to $11.7 billion. However, the stock trades at a price-to-earnings ratio of 48, compared with a 10-year median of 38, meaning it is not cheaply valued. The author argues that paying a rich valuation for a profitably growing company is better than paying a lower one for a company with less-than-stellar prospects, and favors buying and holding the stock for the long term.
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Costco (COST) is more than 10% below its peak, but the article notes such declines have historically been followed by a new record high within a year, though two recent exceptions stand out. Over the past 10 years the stock had seven drops of 10% or more before this one, five of which reached a new high within 12 months, and all seven eventually recovered. The two most recent declines took longer: the slide from the April 2022 high did not recover until December 2023, and the decline that began in February 2025 lasted until May 2026. The author points to slowing comparable sales, which rose 8.8% in June 2026 versus 12.5% in May, and a P/E of 47.3, still above its 10-year average of 40, as reasons a new high within 12 months looks less likely.
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