Costco (Nasdaq: COST) is a wholesale membership retailer with most of its operations within North America. They offer a wide range of branded and private-label items (from groceries to furniture) as well as other services such as pharmacies and gas stations that are all wrapped in the Costco ecosystem.
Customer membership retention is over 90%, has plans for expansion not just in North America but also for its international ventures, and is a cash-generating behemoth.
“Costco’s stock price can rally higher in 2025 because of industry-leading growth, the growth outlook, cash flow, and capital returns”
“Costco is a cash flow powerhouse generating ample free cash flow to sustain operations, pay a regular dividend, offset share-based compensation with buybacks, and build its cash balance quarterly”
There is also a chance of a special dividend in 2025-2026, something Costco has done before.
Revenue growing at 7% year-on-year
Operating income grew by 10.6%
Net income grew by 13.15%
Sales by geography 2024:
United States: $184b
International: $35b
Canada: $34b
Forward P/E: 51
TTM Sales: $254b
TTM Net income: $7.37b
MRQ Cash: $11b
MRQ Debt: $9.95b
Dividend: 0.5% yield with a payout ratio of 26%
You may look at its valuation and think its expensive but one should remember COST actually increased sales in the last recession and sales were only marginally hit in 2008.
In a time of ever upwards pressure on the cost of living and prices in general, Costco offers an opportunity to save money and take market share away from competitors.
*I own and recommend shares of Costco*
Devlin Demontigny 