Investment Followers Are Loving This Costco News
As any investor might tell you, there is a high that comes from discovering you've made the right choice where an investment is concerned, and then doubly so watching that initial financial seed grow and reach heights over time that you might not have thought were possible.
Such is the feeling investors likely now have, if they bought into Costco stock 20 years ago. While we all know that share prices can go up and down over time, Costco — which is listed on NASDAQ under COST — has seen its price literally skyrocket from about $46 per share in 2002, to more than $480 today, representing a meteoric rise in the share value of the warehouse retailer (via Google).
If you look at the figures from the last five years, you'll also see that Costco's share prices have grown 165% over a five-year period. The Motley Fool even points out that Costco's gains doubled the returns on the S&P 500. Inflation could be considered just a small factor because, according to online calculator "In 2013 Dollars," $43.06 back in 2002 would have been worth $67.57 in today's currency, so those high gains are all about increased value in the company. So, what is Costco's secret sauce?
Costco has very high member recruitment and retention rates
The warehouse retailer has a simple formula for making its investors proud — and that's by doing a terrific job of increasing its membership numbers, while also keeping its cardholders coming back for more thanks to its consistently low prices. Membership renewals in the U.S. and Canada alone are said to have reached 91.6%. Another factor: The Motley Fool says Costco thrived when other businesses began to flounder during the pandemic. It saw domestic sales in the U.S. rise by 15%, while international locations increased by 19%. The company also reported a 25% bump in its net income for 2021, equating to about $5 billion.
While everything appears to be going very well for the company, a number of online stock pickers we've seen, including Seeking Alpha and The Motley Fool, say buying into the stock now might be tempting, but its better to hold off for just a bit longer. Even though Costco's corporate signs are strong, market watchers are recommending eager investors stave off buying Costco shares for now — and that's because they feel the stock is now "in a correction," which means there will be some investors looking to sell off their Costco dividends while the values are still at these highs, resulting in some volatility. The opportunity to buy will come, once Costco's share prices become more stable, so it's best to keep monitoring the markets.