The Importance of Portfolio Diversification
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 4 hours ago
0mins
Should l Buy COST?
Source: NASDAQ.COM
- Portfolio Risk Management: Many investors in 2026 realized that owning too many tech stocks exposes their portfolios to risks during economic downturns, lacking sufficient diversification to absorb financial shocks, which negatively impacts overall investment performance.
- Consumer Goods Stock Advantage: Owning consumer goods stocks such as Costco, Procter & Gamble, and PepsiCo can enhance portfolio resilience, as these companies demonstrate strong performance during economic recessions and inflation, providing stable returns for investors.
- Costco's Strong Performance: In its fiscal Q2 2026 report, Costco reported a global membership renewal rate of 89.7%, with U.S. and Canada rates at 92.1%, while April net sales reached $23.9 billion, a 13% increase year-over-year, showcasing its strong appeal even in tough economic times.
- Stable Earnings from Procter & Gamble and PepsiCo: Procter & Gamble's first-quarter revenue of $22.3 billion exceeded expectations, with adjusted EPS of $1.99, while PepsiCo's revenue of $19.4 billion also surpassed forecasts, highlighting both companies' stability and ongoing dividend growth amid economic fluctuations.
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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: 1008.790
Low
769.00
Averages
1061
High
1205
Current: 1008.790
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.
Lower-Income Consumers Running Out of Money Impacting Retail
- Rising Gas Prices Impact Spending: Gas prices have surged to $4.55 per gallon due to the Iran war, the highest since 2022, which may lead lower-income consumers to cut back on spending, negatively affecting the retail sector.
- Costco Outperforms Competitors: Costco's stock has risen about 17% year-to-date, outperforming the S&P 500 index and matching major competitor Walmart, indicating strong competitive positioning in the retail market.
- High-Income Membership Supports Spending: Research shows that 40% of Costco members have household incomes over $125,000, suggesting that high-income consumers continue to spend despite pressures on lower-income households, providing a buffer for Costco's performance.
- Gas Business Drives Membership Growth: Costco's gasoline sales accounted for about 10% of total net sales in 2025, and higher gas prices may attract more consumers, driving membership growth and repeat business, thereby enhancing the company's resilience in an economic downturn.
See More
Costco Members Earn More Than Competitors
- Member Income Advantage: Research from Northwestern University shows that Costco members have an average household income of $81,200, significantly higher than Walmart+ at $61,500 and Amazon Prime at $66,200, indicating Costco's strong appeal among high-income consumers and enhancing its market competitiveness.
- Gasoline Business Contribution: In 2025, Costco's gasoline sales accounted for about 10% of total net sales, providing a stable revenue source that not only supports overall sales performance but also attracts more consumers to shop at its warehouses.
- High Member Loyalty: As of the end of fiscal 2025, Costco's membership renewal rate in the U.S. and Canada reached 92.3%, demonstrating strong customer loyalty, which allows the company to maintain a steady revenue stream even during economic fluctuations.
- Economic Resilience: Although rising gas prices exert pressure on the economy, Costco's affluent member base is better positioned to handle inflation, allowing the company to remain competitive in the retail market and continue attracting consumers.
See More
Consumer Staples Giants Leverage AI for Competitive Edge
- Walmart's Market Advantage: With over 280 million shoppers weekly, Walmart leverages its strong bargaining power and private label to negotiate better prices with suppliers, while using its AI shopping assistant, Sparky, to enhance sales and solidify its market position.
- Costco's Brand Loyalty: Costco passes savings from bulk purchases to customers, maintaining pricing power with its Kirkland Signature brand and achieving a membership renewal rate above 92%, ensuring stable growth in a competitive retail landscape.
- Procter & Gamble's Product Diversity: P&G offers essential products from toothpaste to laundry detergent, boasting a gross margin of 50.88% and a dividend yield of 2.97%, maintaining strong brand loyalty and market share despite price increase pressures.
- AI in Product Development: P&G is utilizing AI to enhance product development efficiency and employee productivity, optimizing internal processes and strengthening its adaptability and innovation capabilities in a rapidly changing market.
See More
Investors Should Focus on Consumer Goods Stocks
- Consumer Goods Advantage: In the context of economic downturns and inflation, investors are reminded to increase their allocation to consumer goods stocks, particularly companies like Costco, Procter & Gamble, and PepsiCo, which are seen as resilient against market shocks.
- Costco Membership Renewal Rates: Costco reported a global membership renewal rate of 89.7% in Q2 2026, with U.S. and Canada rates reaching 92.1%, indicating strong consumer loyalty even in tough times, contributing to April sales of $23.9 billion, a 13% year-over-year increase.
- Procter & Gamble's Strong Performance: Procter & Gamble's first-quarter revenue of $22.3 billion exceeded expectations of $22.1 billion, with adjusted EPS of $1.99 surpassing the $1.90 forecast, demonstrating its ability to maintain stable market demand amid economic fluctuations.
- PepsiCo's Dividend Appeal: PepsiCo's first-quarter revenue of $19.4 billion beat analyst forecasts, and its dividend yield of 3.7% provides a strong return in the consumer goods sector, enhancing investor confidence in its stock stability.
See More
The Importance of Portfolio Diversification
- Portfolio Risk Management: Many investors in 2026 realized that owning too many tech stocks exposes their portfolios to risks during economic downturns, lacking sufficient diversification to absorb financial shocks, which negatively impacts overall investment performance.
- Consumer Goods Stock Advantage: Owning consumer goods stocks such as Costco, Procter & Gamble, and PepsiCo can enhance portfolio resilience, as these companies demonstrate strong performance during economic recessions and inflation, providing stable returns for investors.
- Costco's Strong Performance: In its fiscal Q2 2026 report, Costco reported a global membership renewal rate of 89.7%, with U.S. and Canada rates at 92.1%, while April net sales reached $23.9 billion, a 13% increase year-over-year, showcasing its strong appeal even in tough economic times.
- Stable Earnings from Procter & Gamble and PepsiCo: Procter & Gamble's first-quarter revenue of $22.3 billion exceeded expectations, with adjusted EPS of $1.99, while PepsiCo's revenue of $19.4 billion also surpassed forecasts, highlighting both companies' stability and ongoing dividend growth amid economic fluctuations.
See More
Investors Need to Balance Tech Stocks with Consumer Goods
- Consumer Resilience: Amid economic downturns and inflation, companies like Costco, Procter & Gamble, and PepsiCo are viewed as resilient investments that can provide stable returns, enhancing portfolio resilience against market shocks.
- Costco Membership Renewal Rates: In its fiscal Q2 2026 report, Costco reported a global membership renewal rate of 89.7%, with U.S. and Canada rates at 92.1%, indicating strong brand loyalty and potential for further sales growth.
- Strong P&G Earnings: Procter & Gamble's first-quarter revenue of $22.3 billion exceeded expectations of $22.1 billion, with adjusted EPS of $1.99, showcasing stability amid economic uncertainty, while its 69 consecutive years of dividend increases bolster investor confidence.
- PepsiCo's Market Performance: PepsiCo reported Q1 2026 revenue of $19.4 billion, surpassing analyst forecasts, and its 3.7% dividend yield, along with its status as a
See More
Lower-Income Consumers Running Out of Money Impacting Retail
- Rising Gas Prices Impact Spending: Gas prices have surged to $4.55 per gallon due to the Iran war, the highest since 2022, which may lead lower-income consumers to cut back on spending, negatively affecting the retail sector.
- Costco Outperforms Competitors: Costco's stock has risen about 17% year-to-date, outperforming the S&P 500 index and matching major competitor Walmart, indicating strong competitive positioning in the retail market.
- High-Income Membership Supports Spending: Research shows that 40% of Costco members have household incomes over $125,000, suggesting that high-income consumers continue to spend despite pressures on lower-income households, providing a buffer for Costco's performance.
- Gas Business Drives Membership Growth: Costco's gasoline sales accounted for about 10% of total net sales in 2025, and higher gas prices may attract more consumers, driving membership growth and repeat business, thereby enhancing the company's resilience in an economic downturn.
See More
Costco Members Earn More Than Competitors
- Member Income Advantage: Research from Northwestern University shows that Costco members have an average household income of $81,200, significantly higher than Walmart+ at $61,500 and Amazon Prime at $66,200, indicating Costco's strong appeal among high-income consumers and enhancing its market competitiveness.
- Gasoline Business Contribution: In 2025, Costco's gasoline sales accounted for about 10% of total net sales, providing a stable revenue source that not only supports overall sales performance but also attracts more consumers to shop at its warehouses.
- High Member Loyalty: As of the end of fiscal 2025, Costco's membership renewal rate in the U.S. and Canada reached 92.3%, demonstrating strong customer loyalty, which allows the company to maintain a steady revenue stream even during economic fluctuations.
- Economic Resilience: Although rising gas prices exert pressure on the economy, Costco's affluent member base is better positioned to handle inflation, allowing the company to remain competitive in the retail market and continue attracting consumers.
See More
Consumer Staples Giants Leverage AI for Competitive Edge
- Walmart's Market Advantage: With over 280 million shoppers weekly, Walmart leverages its strong bargaining power and private label to negotiate better prices with suppliers, while using its AI shopping assistant, Sparky, to enhance sales and solidify its market position.
- Costco's Brand Loyalty: Costco passes savings from bulk purchases to customers, maintaining pricing power with its Kirkland Signature brand and achieving a membership renewal rate above 92%, ensuring stable growth in a competitive retail landscape.
- Procter & Gamble's Product Diversity: P&G offers essential products from toothpaste to laundry detergent, boasting a gross margin of 50.88% and a dividend yield of 2.97%, maintaining strong brand loyalty and market share despite price increase pressures.
- AI in Product Development: P&G is utilizing AI to enhance product development efficiency and employee productivity, optimizing internal processes and strengthening its adaptability and innovation capabilities in a rapidly changing market.
See More
Investors Should Focus on Consumer Goods Stocks
- Consumer Goods Advantage: In the context of economic downturns and inflation, investors are reminded to increase their allocation to consumer goods stocks, particularly companies like Costco, Procter & Gamble, and PepsiCo, which are seen as resilient against market shocks.
- Costco Membership Renewal Rates: Costco reported a global membership renewal rate of 89.7% in Q2 2026, with U.S. and Canada rates reaching 92.1%, indicating strong consumer loyalty even in tough times, contributing to April sales of $23.9 billion, a 13% year-over-year increase.
- Procter & Gamble's Strong Performance: Procter & Gamble's first-quarter revenue of $22.3 billion exceeded expectations of $22.1 billion, with adjusted EPS of $1.99 surpassing the $1.90 forecast, demonstrating its ability to maintain stable market demand amid economic fluctuations.
- PepsiCo's Dividend Appeal: PepsiCo's first-quarter revenue of $19.4 billion beat analyst forecasts, and its dividend yield of 3.7% provides a strong return in the consumer goods sector, enhancing investor confidence in its stock stability.
See More
The Importance of Portfolio Diversification
- Portfolio Risk Management: Many investors in 2026 realized that owning too many tech stocks exposes their portfolios to risks during economic downturns, lacking sufficient diversification to absorb financial shocks, which negatively impacts overall investment performance.
- Consumer Goods Stock Advantage: Owning consumer goods stocks such as Costco, Procter & Gamble, and PepsiCo can enhance portfolio resilience, as these companies demonstrate strong performance during economic recessions and inflation, providing stable returns for investors.
- Costco's Strong Performance: In its fiscal Q2 2026 report, Costco reported a global membership renewal rate of 89.7%, with U.S. and Canada rates at 92.1%, while April net sales reached $23.9 billion, a 13% increase year-over-year, showcasing its strong appeal even in tough economic times.
- Stable Earnings from Procter & Gamble and PepsiCo: Procter & Gamble's first-quarter revenue of $22.3 billion exceeded expectations, with adjusted EPS of $1.99, while PepsiCo's revenue of $19.4 billion also surpassed forecasts, highlighting both companies' stability and ongoing dividend growth amid economic fluctuations.
See More
Investors Need to Balance Tech Stocks with Consumer Goods
- Consumer Resilience: Amid economic downturns and inflation, companies like Costco, Procter & Gamble, and PepsiCo are viewed as resilient investments that can provide stable returns, enhancing portfolio resilience against market shocks.
- Costco Membership Renewal Rates: In its fiscal Q2 2026 report, Costco reported a global membership renewal rate of 89.7%, with U.S. and Canada rates at 92.1%, indicating strong brand loyalty and potential for further sales growth.
- Strong P&G Earnings: Procter & Gamble's first-quarter revenue of $22.3 billion exceeded expectations of $22.1 billion, with adjusted EPS of $1.99, showcasing stability amid economic uncertainty, while its 69 consecutive years of dividend increases bolster investor confidence.
- PepsiCo's Market Performance: PepsiCo reported Q1 2026 revenue of $19.4 billion, surpassing analyst forecasts, and its 3.7% dividend yield, along with its status as a
See More
