Costco Thrives in K-Shaped Economy with Strong Positioning
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 day ago
0mins
Should l Buy COST?
Source: Benzinga
- Market Positioning Advantage: Costco excels in the K-shaped economy by leveraging value pricing and loyal membership strategies, successfully attracting consumers across various income groups, thereby maintaining stable traffic.
- Analyst Outlook: BofA Securities analyst Christopher Nardone reinstated coverage on Costco with a price target of $1,185, asserting that the company is “well positioned” in the current economic landscape, appealing to both high-income and value-focused shoppers.
- Brand and Membership Growth: Costco's Kirkland brand accounts for one-third of sales, enhancing supplier leverage and protecting merchandise margins, while the growth in executive memberships indicates customers are willing to trade up for added benefits, with executive members representing nearly half of total membership and revenue.
- Risks and Opportunities: Despite the risks associated with the growth of younger, digitally engaged members and e-commerce execution, Nardone views these shifts as constructive long-term opportunities for Costco, especially as price reductions during easing food inflation are likely to boost in-store visits.
Trade with 70% Backtested Accuracy
Stop guessing "Should I Buy COST?" and start using high-conviction signals backed by rigorous historical data.
Sign up today to access powerful investing tools and make smarter, data-driven decisions.
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: 986.740
Low
769.00
Averages
1061
High
1205
Current: 986.740
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.
Costco Faces Membership Renewal Challenges
- Underperformance: Despite the S&P 500's 16% rise, Costco's stock has dipped 3% over the past year, indicating relative weakness in the market that could impact investor confidence.
- Declining Renewal Rates: Costco's global membership renewal rate fell from 90.4% to 89.7%, primarily due to lower engagement from digitally signed members, which may lead to future revenue uncertainty.
- Strategic Adjustments: To address the decline in renewal rates, Costco plans to enhance digital communications, promote auto-renewal features, and introduce additional perks to increase perceived membership value and loyalty.
- Future Growth Outlook: Despite renewal pressures, analysts expect Costco's net sales and EPS to grow at CAGRs of 8% and 11% from 2025 to 2028, indicating that its long-term investment value remains intact.
See More
Amazon vs. Costco: A Financial Comparison
- Amazon Cloud Growth: Amazon's Q4 cloud computing revenue surged 24% year-over-year to $35.6 billion, indicating a strong acceleration in demand for AWS as optimization pressures ease, highlighting robust demand for AI infrastructure.
- Costco Membership Renewal: Despite raising membership fees in 2024, Costco maintained an impressive 92.2% renewal rate in the U.S. and Canada, showcasing strong customer loyalty and a stable revenue stream, with membership fee revenue increasing 14% to $1.33 billion.
- Amazon Investment Plans: Amazon plans to invest approximately $200 billion in capital expenditures in 2026, sharply up from $131.8 billion in 2025, which will pressure short-term free cash flow but underscores the company's confidence in future growth.
- Valuation Discrepancy: Amazon trades at about 29 times earnings compared to Costco's 54 times, reflecting the market's confidence in Costco's predictable business model, yet this high valuation leaves little room for error if consumer spending slows.
See More
Investment Comparison: Amazon vs. Costco
- Amazon's Accelerating Growth: Amazon's Q4 net sales rose 14% year-over-year to $213.4 billion, with its cloud computing segment, AWS, seeing a 24% revenue increase, indicating strong market demand, although future capital expenditure plans may pressure free cash flow.
- Capital Expenditure Plans: Amazon expects to ramp up capital expenditures to $200 billion in 2026, significantly higher than the $131.8 billion spent in 2025, aiming to meet surging demand for AI and cloud services, despite potential short-term impacts on operating income.
- Costco's Stable Sales: Costco's net sales increased by 8.2% year-over-year to approximately $66 billion in Q1 FY2026, with membership fee revenue rising 14%, demonstrating business stability and customer loyalty, although it faces risks from high valuation.
- Market Valuation Discrepancies: Amazon trades at about 29 times earnings, which is considered attractive given its rapid growth in advertising and cloud revenue, while Costco's valuation at 54 times earnings reflects near-perfect execution expectations, leaving little room for error.
See More
Cross Staff Investments Acquires 289,630 Shares of AKRE Focus ETF
- New Investment Position: Cross Staff Investments Inc established a new position in the Professionally Managed Portfolios - Akre Focus ETF by purchasing 289,630 shares valued at $18.97 million as of February 27, 2026, indicating confidence in the fund's future performance.
- Asset Allocation Insight: This investment represents 10.45% of Cross Staff's 13F reportable AUM as of December 31, 2025, highlighting the significance of AKRE in its portfolio and potentially influencing its overall investment strategy and risk management.
- Market Performance Consideration: As of February 28, 2026, AKRE shares were priced at $56.14, reflecting a 20.61% decline over the past year and underperforming the S&P 500 by 37.97 percentage points, indicating a lack of market confidence in the ETF that may affect investor decisions.
- Investment Risk Advisory: While AKRE focuses on small- and mid-cap stocks with high growth potential, its concentrated investment strategy in a limited number of stocks also introduces higher volatility risks, necessitating careful evaluation of potential risks versus rewards by investors considering this ETF.
See More
February Market Review and Outlook
- Nvidia Stock Decline: Despite Nvidia reporting a strong quarter and even stronger forward guidance, its shares fell 7.3% in February, primarily due to concerns about whether its major clients can sustain their capital expenditure plans, which negatively impacted investor confidence.
- Tech Sector Downturn: The S&P 500 and Nasdaq dropped 0.4% and nearly 1% respectively, with monthly declines of nearly 1% for the S&P 500 and 3.4% for the Nasdaq marking the worst performance since March 2025, highlighting the disruptive impact of AI on the market.
- Geopolitical Market Influence: The future direction of the markets may hinge on geopolitical developments, particularly regarding Iran, as President Trump expressed dissatisfaction with the nuclear deal negotiations, potentially increasing market uncertainty, even as oil prices have risen about 17% year to date.
- Upcoming Earnings Reports: Next week will see Berkshire Hathaway's first earnings report under new CEO Greg Abel, alongside earnings from Norwegian Cruise Line and Target, with market expectations high for these companies' performances in a competitive retail landscape.
See More
Stocks Decline Once More as Technology Selloff Continues
- Concerns Over Software Stocks: The worries regarding software stocks, referred to as the "SaaSpocalypse," have intensified recently.
- Impact on Tech Sector: These concerns have spread beyond software to affect the broader tech sector, including semiconductor and hardware companies.
See More
Costco Faces Membership Renewal Challenges
- Underperformance: Despite the S&P 500's 16% rise, Costco's stock has dipped 3% over the past year, indicating relative weakness in the market that could impact investor confidence.
- Declining Renewal Rates: Costco's global membership renewal rate fell from 90.4% to 89.7%, primarily due to lower engagement from digitally signed members, which may lead to future revenue uncertainty.
- Strategic Adjustments: To address the decline in renewal rates, Costco plans to enhance digital communications, promote auto-renewal features, and introduce additional perks to increase perceived membership value and loyalty.
- Future Growth Outlook: Despite renewal pressures, analysts expect Costco's net sales and EPS to grow at CAGRs of 8% and 11% from 2025 to 2028, indicating that its long-term investment value remains intact.
See More
Amazon vs. Costco: A Financial Comparison
- Amazon Cloud Growth: Amazon's Q4 cloud computing revenue surged 24% year-over-year to $35.6 billion, indicating a strong acceleration in demand for AWS as optimization pressures ease, highlighting robust demand for AI infrastructure.
- Costco Membership Renewal: Despite raising membership fees in 2024, Costco maintained an impressive 92.2% renewal rate in the U.S. and Canada, showcasing strong customer loyalty and a stable revenue stream, with membership fee revenue increasing 14% to $1.33 billion.
- Amazon Investment Plans: Amazon plans to invest approximately $200 billion in capital expenditures in 2026, sharply up from $131.8 billion in 2025, which will pressure short-term free cash flow but underscores the company's confidence in future growth.
- Valuation Discrepancy: Amazon trades at about 29 times earnings compared to Costco's 54 times, reflecting the market's confidence in Costco's predictable business model, yet this high valuation leaves little room for error if consumer spending slows.
See More
Investment Comparison: Amazon vs. Costco
- Amazon's Accelerating Growth: Amazon's Q4 net sales rose 14% year-over-year to $213.4 billion, with its cloud computing segment, AWS, seeing a 24% revenue increase, indicating strong market demand, although future capital expenditure plans may pressure free cash flow.
- Capital Expenditure Plans: Amazon expects to ramp up capital expenditures to $200 billion in 2026, significantly higher than the $131.8 billion spent in 2025, aiming to meet surging demand for AI and cloud services, despite potential short-term impacts on operating income.
- Costco's Stable Sales: Costco's net sales increased by 8.2% year-over-year to approximately $66 billion in Q1 FY2026, with membership fee revenue rising 14%, demonstrating business stability and customer loyalty, although it faces risks from high valuation.
- Market Valuation Discrepancies: Amazon trades at about 29 times earnings, which is considered attractive given its rapid growth in advertising and cloud revenue, while Costco's valuation at 54 times earnings reflects near-perfect execution expectations, leaving little room for error.
See More
Cross Staff Investments Acquires 289,630 Shares of AKRE Focus ETF
- New Investment Position: Cross Staff Investments Inc established a new position in the Professionally Managed Portfolios - Akre Focus ETF by purchasing 289,630 shares valued at $18.97 million as of February 27, 2026, indicating confidence in the fund's future performance.
- Asset Allocation Insight: This investment represents 10.45% of Cross Staff's 13F reportable AUM as of December 31, 2025, highlighting the significance of AKRE in its portfolio and potentially influencing its overall investment strategy and risk management.
- Market Performance Consideration: As of February 28, 2026, AKRE shares were priced at $56.14, reflecting a 20.61% decline over the past year and underperforming the S&P 500 by 37.97 percentage points, indicating a lack of market confidence in the ETF that may affect investor decisions.
- Investment Risk Advisory: While AKRE focuses on small- and mid-cap stocks with high growth potential, its concentrated investment strategy in a limited number of stocks also introduces higher volatility risks, necessitating careful evaluation of potential risks versus rewards by investors considering this ETF.
See More
February Market Review and Outlook
- Nvidia Stock Decline: Despite Nvidia reporting a strong quarter and even stronger forward guidance, its shares fell 7.3% in February, primarily due to concerns about whether its major clients can sustain their capital expenditure plans, which negatively impacted investor confidence.
- Tech Sector Downturn: The S&P 500 and Nasdaq dropped 0.4% and nearly 1% respectively, with monthly declines of nearly 1% for the S&P 500 and 3.4% for the Nasdaq marking the worst performance since March 2025, highlighting the disruptive impact of AI on the market.
- Geopolitical Market Influence: The future direction of the markets may hinge on geopolitical developments, particularly regarding Iran, as President Trump expressed dissatisfaction with the nuclear deal negotiations, potentially increasing market uncertainty, even as oil prices have risen about 17% year to date.
- Upcoming Earnings Reports: Next week will see Berkshire Hathaway's first earnings report under new CEO Greg Abel, alongside earnings from Norwegian Cruise Line and Target, with market expectations high for these companies' performances in a competitive retail landscape.
See More
Stocks Decline Once More as Technology Selloff Continues
- Concerns Over Software Stocks: The worries regarding software stocks, referred to as the "SaaSpocalypse," have intensified recently.
- Impact on Tech Sector: These concerns have spread beyond software to affect the broader tech sector, including semiconductor and hardware companies.
See More
