Rising Gas Prices Boost Costco Sales
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Mar 20 2026
0mins
Should l Buy COST?
Source: CNBC
- Impact of Rising Oil Prices: With the Iran war ongoing, oil prices have surged to a four-year high, pushing the national average for regular unleaded gasoline to $3.91 per gallon, which, while below the all-time high of $5.02 in April 2022, has driven consumers to Costco for cheaper fuel, thereby increasing in-store traffic.
- Costco's Value Proposition: Costco typically offers gas prices at a 9-cent discount compared to local competitors and a 24-cent discount versus the state average, making this price advantage particularly significant as fuel costs rise, attracting more bargain-seeking consumers and enhancing its market competitiveness.
- Customer Traffic Analysis: According to Gordon Haskett's analysis, visits to Costco gas stations sharply increased in the week ending March 7, and continued to accelerate as prices rose, with data indicating that 50% of gas customers also enter Costco stores, further driving sales growth.
- Economic Impact and Outlook: While rising gas prices may exert financial pressure on consumers, leading them to cut back on non-essentials, Costco tends to perform better during economic downturns due to its stable pricing strategy, with analysts optimistic about its future stock price, setting a target of $1,100 per share, representing a 13% upside from current levels.
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Analyst Views on COST
Wall Street analysts forecast COST stock price to rise
24 Analyst Rating
19 Buy
4 Hold
1 Sell
Strong Buy
Current: 1012.060
Low
769.00
Averages
1061
High
1205
Current: 1012.060
Low
769.00
Averages
1061
High
1205
About COST
Costco Wholesale Corporation (Costco) operates membership warehouses and e-commerce sites that offer a selection of nationally branded and private-label products in a wide range of categories. The Company buys the majority of its merchandise directly from suppliers and route it to cross-docking consolidation points (depots) or directly to its warehouses. It operates 891 warehouses, including 614 in the United States and Puerto Rico, 108 in Canada, 40 in Mexico, 35 in Japan, 29 in the United Kingdom, 19 in Korea, 15 in Australia, 14 in Taiwan, seven in China, five in Spain, two in France, and one each in Iceland, New Zealand and Sweden. It also operates e-commerce sites in the United States, Canada, the United Kingdom, Mexico, Korea, Taiwan, Japan and Australia. The Company provides wide selection of merchandise, plus the convenience of specialty departments and exclusive member services.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Comparable Sales Growth: Total comparable sales rose 11.6%, with digital comparable sales climbing 18.8%, indicating a sustained consumer demand for online shopping and further solidifying Costco's competitive position in the retail market.
- Membership Fee Income Growth: Membership fee income increased by 13.6%, with a 7.5% rise after excluding foreign exchange impacts, reflecting the company's confidence in future growth and its ability to continue attracting new members.
- Future Outlook: Despite facing tariff risks and a slight decline in membership renewal rates, the company plans to open 28 new warehouses in fiscal 2026, showcasing its long-term growth potential, and investors may consider starting a small position to capture future gains.
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- Optimistic Future Outlook: Costco plans to open over 30 new warehouses annually, and with strong sales data and membership growth, it is expected to maintain a competitive edge in the market, especially in an environment where defensive growth is scarce.
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- Chip Business Gains Attention: Amazon's chip division has reached a $20 billion annual run-rate, with projections of $50 billion when including internal usage, which, while not counted in sales, significantly reduces inference costs and enhances capital expenditure efficiency, boosting investor confidence.
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- Legal Liability Dispute: The complaint claims that Nike has made no legally binding commitment to return tariff-related overcharges, raising concerns that the company could profit twice—once from consumers through higher prices and again from the government through tariff refunds.
- Industry Context: Nike's lawsuit parallels similar cases against companies like Costco and EssilorLuxottica, highlighting growing consumer scrutiny regarding corporate transparency and accountability in the wake of tariff policy changes.
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- Margin Pressure: The company targets a full-year adjusted EBITDA margin of 40%, yet reported only 30% in Q1, necessitating substantial revenue growth or aggressive cost control in the second half, with management failing to provide a clear strategy, thus increasing market uncertainty.
- Long-Term Outlook Remains Positive: Despite short-term challenges, Trade Desk's long-term strategies, including open internet principles, retail media, and AI search, remain attractive, with Jeff Green's $150 million stock purchase reflecting confidence in the company's future.
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