Anders Bylund, The Motley Fool
4 min read
Costco Wholesale (NASDAQ: COST) stock is trading for $954 per share today, June 26. Some investors think that’s expensive, but I’m not terribly concerned about the price.
I mean, the stock looks pricey by pretty much any metric, especially in the context of its discount-retailer peers. From Walmart and Target to Dollar Tree and PriceSmart, they all trade at lower price-to-whatever ratios than Costco. This is true for price to earnings, price-to-book value, even the growth-adjusted price-to-earnings-to-growth (PEG) ratio.
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But the warehouse club has earned its lofty valuation ratios with fantastic business results, and I’m convinced that the best is yet to come. Here’s why I expect Costco’s stock to rise in the next five years, even from this high-priced starting point.
Wall Street loves Costco, too
I’m far from the only Costco bull out there.
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Wall Street agrees. The average analyst firm holds a buy rating on Costco’s stock, with a consensus price target 14% above current levels.
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The true bears are few and far between. About 1.8% of Costco’s shares are on loan to short-sellers, just below Walmart’s 1.9%. No other discount retailer stands below 3.6% on this metric.
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The premium stock price is no accident. Costco wouldn’t trade at 48 times trailing earnings and 48 times free cash flow if Wall Street were skeptical as a whole.
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There’s still bullish momentum behind Costco. Despite its pricey valuation ratios, the stock has outperformed the S&P 500 and Nasdaq Composite market indexes in 2026.
What makes Costco’s stock worth the splurge
Of course, having plenty of investors on my side of the bull/bear fence doesn’t prove I’m right. The majority can be wrong in the long run, and so can the Street’s experts.
So, let me translate “premium valuation” into plain English: Costco has earned the right to be expensive on Wall Street.
Its 82.9 million paid members keep coming back. The 92.2% renewal rate in the U.S. and Canada isn’t just a number; it’s a loyalty metric that most subscription businesses would trade their TikTok accounts for.
Membership fee income rose 10.7% to $1.37 billion in May’s third-quarter 2026 report. These fees carry near-100% margins and fund aggressive price investments that competitors can’t match. Without the paid loyalty program, Costco’s store prices would be higher, and its profits would be even lower.
