Shares of Costco (COST) have delivered impressive returns, climbing about 40% over the past year, outpacing the S&P 500 Index’s ($SPX) 24.2% gain. This growth in Costco stock reflects its ability to grow its same-store sales, retain its customer base, and expand its e-commerce capabilities.
The ongoing momentum in its business indicates that the stock could continue to trend higher in 2025. Further, at least one Wall Street analyst expects shares of this membership-based warehouse retailer to reach $1,175, the Street-high price target. This represents about 27% upside from its last closing price of $927.37 on Jan. 8. Let’s take a closer look at the company’s recent performance and what it could mean for the year ahead.
A Strong December Bolsters Confidence
Costco kicked off the holiday season with robust results. The retailer reported a 9.9% increase in comparable sales for December, excluding fluctuations in gasoline prices and foreign exchange. This growth surpassed expectations, including a 9.8% rise in U.S. sales, a 10.3% increase in Canada, and a 9.8% uptick internationally.
The company's e-commerce platform remained strong, with online sales soaring by 35.7% for the month. A calendar shift played a role, as Cyber Monday landed in December this year, contributing an estimated 15% points to the e-commerce boost. Overall, the shift in holiday shopping dates added roughly 1.5% to total and comparable sales growth.
Factors Supporting Costco Stock
Costco is poised to deliver solid financials, driven by a high membership renewal rate. By the end of the first quarter of fiscal 2025, its renewal rate in the U.S. and Canada stood at 92.8%, with a global rate of 90.4%. These figures highlight Costco’s ability to maintain a loyal customer base, even during periods of economic uncertainty.
Adding to its growth positives, Costco recently raised its membership fees, which has historically boosted earnings and stock performance. The fee hike will be realized in the second half of fiscal 2025 and into 2026, further strengthening Costco’s financials.
Costco’s e-commerce operations will likely be the significant growth driver in 2025. In the first quarter of fiscal 2025, the company reported increased online traffic, conversion rates, and average order values, supporting comparable store sales. This momentum in the e-commerce business will likely sustain, driven by new initiatives such as “buy online, pick up in-store,” which not only improves customer convenience, but also reduces shipping costs.
Looking ahead, Costco plans to enhance its e-commerce offerings further by improving product assortment, delivery times, and scheduling functionalities. Big and bulky items are expected to drive online sales growth in 2025. Additionally, the company is starting to reap the rewards of technological investments made over the past year.
Costco’s focus on improving customer experience will further support growth. The ability to check warehouse inventory via the Costco app has resonated well with members. Moreover, the membership card scanners at store entrances have sped up the checkout process, earning positive feedback. With more improvements in the pipeline, these initiatives are expected to bolster both in-store and online shopping experiences, solidifying customer loyalty.
The Bottom Line on COST Stock
Costco’s ability to consistently deliver strong results stems from its core strengths, including a solid value proposition, a steadily growing membership base, and its investments in e-commerce capabilities. The warehouse retailer will also likely benefit from a recent hike in membership fees, which adds to its recurring revenue stream.
These factors suggest that Costco’s momentum is far from slowing down. The company’s strategy of balancing in-store and online growth, coupled with its strong brand loyalty, positions it well to capitalize on consumer spending, and its stock price could hit the $1,175 Street-high price target in 2025.
However, Costco stock trades at a premium valuation compared to its peers. Thus, not all analysts endorse Costco stock, and it sports a “Moderate Buy” consensus rating. Considering its above-average comparable sales growth rate, Costco's premium valuation is warranted.
