Bullish Outlook for Costco and Retail Stocks
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 5 days ago
0mins
Should l Buy COST?
Source: NASDAQ.COM
- Costco Stock Surge: Costco shares have risen 16% in 2026, significantly outperforming the market, demonstrating its robust recovery capabilities in the retail sector, particularly against the backdrop of improving tariff policies.
- Five Below's Business Turnaround: Five Below achieved over 20% sales growth in 2025 despite facing tariffs on two-thirds of its imported goods, with CEO Winnie Park's leadership driving effective expansion strategies that are beginning to pay off.
- Wayfair's Strong Growth: After experiencing sales declines in 2024, Wayfair closed 2025 with three consecutive quarters of strong growth, indicating its recovery potential in the furniture market, especially with expectations of a housing market rebound.
- Tariff Policy Impact: The Trump administration's plan to implement a 15% global tariff poses challenges for Costco and Five Below, but it also provides these retailers an opportunity to reassess pricing strategies and profit distribution, potentially rewarding investors through special dividends.
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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: 1010.790
Low
769.00
Averages
1061
High
1205
Current: 1010.790
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.
Costco's Impressive Returns Highlighting Boring Business Potential
- Steady Financial Performance: Over the past five years, Costco's revenue has grown at a compound annual rate of 9.3%, with no down years, demonstrating resilience during economic turmoil and strong consumer preference.
- Strong Market Competitiveness: In Q1 2026, Costco reported net sales of $66 billion, leveraging massive scale and fewer stock-keeping units to enhance bargaining power with suppliers, resulting in everyday low prices for consumers.
- High Investor Attention: With a market cap of $445 billion, Costco's business durability is widely recognized, although its price-to-earnings ratio of 53.6 raises questions about its valuation, being 15% higher than Nvidia's.
- Purchase Strategy Recommendations: Given the current high valuation, investors are advised to wait for a significant pullback before considering purchases, or to adopt a dollar-cost averaging strategy to mitigate investment risks across different price points.
See More
Court Denies Trump Administration's Request to Delay Tariff Refunds
- Tariff Refund Progress: A federal court denied the Trump administration's request to delay the refund of billions in tariffs, stating that there is no reason to postpone the issuance of the mandate, which will expedite the refund process for small businesses and alleviate their financial burdens.
- Small Business Benefits: The U.S. Court of International Trade is now authorized to begin formulating relief for small businesses that successfully contested Trump's global tariffs, with lawyers indicating they will proceed immediately to handle the refunds, potentially improving cash flow for these businesses.
- Supreme Court Decision Impact: Last month, the Supreme Court invalidated $133 billion in tariffs, and while it did not rule on the matter of refunds, this decision provides legal support for small businesses seeking refunds, likely encouraging more businesses to engage in litigation.
- Trump Administration's Response: Trump questioned whether the case could be reheard; however, the DOJ did not signal any intention to request a Supreme Court review, indicating a potentially passive stance from the administration on this issue.
See More
Target to Report Holiday Earnings Amid Sales Slump
- Earnings Expectations: Target anticipates holiday-quarter earnings per share of $2.15 and revenue of $30.48 billion, although these figures fall short of last year's results, indicating ongoing struggles amid a sales slump.
- Sales Outlook: The company has confirmed a low single-digit percentage decline in fourth-quarter sales and expects adjusted earnings per share for fiscal 2025 to range between $7 and $8, reflecting persistent market challenges and weak consumer confidence.
- Layoff Impact: Target's decision to cut 1,800 corporate jobs in October marks its first major layoffs in a decade, underscoring the urgency to address sales weakness and customer attrition.
- Competitive Pressure: Compared to rivals like Walmart and Costco, Target's sales performance has lagged, leading to customer losses and market share declines, prompting new CEO Fiddelke to emphasize strategies for improving customer experience and brand reputation.
See More
US Stock Futures Decline Amid Escalating Middle East Conflict
- Market Reaction: US stock futures edged lower late Monday, with S&P 500 futures down about 0.2%, Nasdaq 100 futures falling 0.3%, and Dow Jones Industrial Average futures dropping roughly 0.2%, reflecting investor concerns over the escalating conflict in the Middle East.
- Defensive Stocks Performance: Despite the overall market decline, defense and energy stocks saw gains, with shares of Lockheed Martin (LMT) and Palantir (PLTR) jumping significantly, while Nvidia (NVDA) advanced about 3%, providing support to broader equity indexes.
- Oil Price Volatility: Crude prices surged due to fears that hostilities could disrupt key supply routes, reigniting inflation concerns, particularly after reports indicated the closure of the Strait of Hormuz, exacerbating the situation.
- Economic Outlook Uncertainty: As tensions between the US and Iran escalate, President Trump indicated that the conflict could last four to five weeks, although he acknowledged it might extend longer, potentially leading to significant economic repercussions in the US and beyond.
See More
Major Retailers Continue Earnings Season This Week
- AST SpaceMobile Earnings Outlook: AST SpaceMobile, Inc. (NASDAQ:ASTS) is set to report its Q4 results after Monday's close, with Wall Street anticipating a loss of 16 cents per share on revenue of $41.11 million, indicating competitive pressures in the market.
- CrowdStrike Growth Target: CrowdStrike Holdings, Inc. (NASDAQ:CRWD) will release its earnings after Tuesday's close, with investors keen to see if it can achieve at least 50% year-over-year growth in net new ARR, confirming its 20% growth trajectory and justifying its premium valuation.
- Broadcom Earnings Focus: Broadcom Inc. (NASDAQ:AVGO) is expected to report its Q1 results on Wednesday afternoon, with analysts forecasting EPS of $2.02 on revenue of $19.14 billion, while investors will be watching if AI semiconductor revenue doubles to $8.2 billion.
- JD.com Earnings Preview: JD.com, Inc. (NASDAQ:JD) is expected to release its results before Thursday's open, with Wall Street predicting a loss of 3 cents per share and revenue of $50.22 billion, reflecting the challenges and opportunities in the Chinese e-commerce market.
See More
Iran Conflict Triggers Market Turmoil
- Iranian Leader Killed: The U.S.-Israeli operation that resulted in the death of Iran's Supreme Leader Ayatollah Khamenei has led to hundreds of Iranian civilian casualties, marking one of the most significant impacts on Iran since 1979, potentially escalating regional conflicts and altering global political dynamics.
- Market Response: Concerns over the conflict have sharply pulled back stock futures in premarket trading, while gold futures advanced as investors sought safe havens, indicating a strong market reaction to the heightened uncertainty surrounding future developments.
- Berkshire Hathaway Earnings Decline: In Warren Buffett's last quarter as CEO, Berkshire Hathaway reported a nearly 30% drop in operating earnings, primarily due to a 54% decline in profits from its insurance underwriting business, although new CEO Greg Abel's shareholder letter received positive feedback from analysts.
- AI Industry Developments: Trump forced U.S. agencies to cease using Anthropic's technology, while OpenAI secured a deal with the Department of Defense, highlighting intensifying competition in the AI sector; however, Anthropic's Claude AI app surged in popularity, suggesting a potential boost in public support for the company.
See More
Costco's Impressive Returns Highlighting Boring Business Potential
- Steady Financial Performance: Over the past five years, Costco's revenue has grown at a compound annual rate of 9.3%, with no down years, demonstrating resilience during economic turmoil and strong consumer preference.
- Strong Market Competitiveness: In Q1 2026, Costco reported net sales of $66 billion, leveraging massive scale and fewer stock-keeping units to enhance bargaining power with suppliers, resulting in everyday low prices for consumers.
- High Investor Attention: With a market cap of $445 billion, Costco's business durability is widely recognized, although its price-to-earnings ratio of 53.6 raises questions about its valuation, being 15% higher than Nvidia's.
- Purchase Strategy Recommendations: Given the current high valuation, investors are advised to wait for a significant pullback before considering purchases, or to adopt a dollar-cost averaging strategy to mitigate investment risks across different price points.
See More
Court Denies Trump Administration's Request to Delay Tariff Refunds
- Tariff Refund Progress: A federal court denied the Trump administration's request to delay the refund of billions in tariffs, stating that there is no reason to postpone the issuance of the mandate, which will expedite the refund process for small businesses and alleviate their financial burdens.
- Small Business Benefits: The U.S. Court of International Trade is now authorized to begin formulating relief for small businesses that successfully contested Trump's global tariffs, with lawyers indicating they will proceed immediately to handle the refunds, potentially improving cash flow for these businesses.
- Supreme Court Decision Impact: Last month, the Supreme Court invalidated $133 billion in tariffs, and while it did not rule on the matter of refunds, this decision provides legal support for small businesses seeking refunds, likely encouraging more businesses to engage in litigation.
- Trump Administration's Response: Trump questioned whether the case could be reheard; however, the DOJ did not signal any intention to request a Supreme Court review, indicating a potentially passive stance from the administration on this issue.
See More
Target to Report Holiday Earnings Amid Sales Slump
- Earnings Expectations: Target anticipates holiday-quarter earnings per share of $2.15 and revenue of $30.48 billion, although these figures fall short of last year's results, indicating ongoing struggles amid a sales slump.
- Sales Outlook: The company has confirmed a low single-digit percentage decline in fourth-quarter sales and expects adjusted earnings per share for fiscal 2025 to range between $7 and $8, reflecting persistent market challenges and weak consumer confidence.
- Layoff Impact: Target's decision to cut 1,800 corporate jobs in October marks its first major layoffs in a decade, underscoring the urgency to address sales weakness and customer attrition.
- Competitive Pressure: Compared to rivals like Walmart and Costco, Target's sales performance has lagged, leading to customer losses and market share declines, prompting new CEO Fiddelke to emphasize strategies for improving customer experience and brand reputation.
See More
US Stock Futures Decline Amid Escalating Middle East Conflict
- Market Reaction: US stock futures edged lower late Monday, with S&P 500 futures down about 0.2%, Nasdaq 100 futures falling 0.3%, and Dow Jones Industrial Average futures dropping roughly 0.2%, reflecting investor concerns over the escalating conflict in the Middle East.
- Defensive Stocks Performance: Despite the overall market decline, defense and energy stocks saw gains, with shares of Lockheed Martin (LMT) and Palantir (PLTR) jumping significantly, while Nvidia (NVDA) advanced about 3%, providing support to broader equity indexes.
- Oil Price Volatility: Crude prices surged due to fears that hostilities could disrupt key supply routes, reigniting inflation concerns, particularly after reports indicated the closure of the Strait of Hormuz, exacerbating the situation.
- Economic Outlook Uncertainty: As tensions between the US and Iran escalate, President Trump indicated that the conflict could last four to five weeks, although he acknowledged it might extend longer, potentially leading to significant economic repercussions in the US and beyond.
See More
Major Retailers Continue Earnings Season This Week
- AST SpaceMobile Earnings Outlook: AST SpaceMobile, Inc. (NASDAQ:ASTS) is set to report its Q4 results after Monday's close, with Wall Street anticipating a loss of 16 cents per share on revenue of $41.11 million, indicating competitive pressures in the market.
- CrowdStrike Growth Target: CrowdStrike Holdings, Inc. (NASDAQ:CRWD) will release its earnings after Tuesday's close, with investors keen to see if it can achieve at least 50% year-over-year growth in net new ARR, confirming its 20% growth trajectory and justifying its premium valuation.
- Broadcom Earnings Focus: Broadcom Inc. (NASDAQ:AVGO) is expected to report its Q1 results on Wednesday afternoon, with analysts forecasting EPS of $2.02 on revenue of $19.14 billion, while investors will be watching if AI semiconductor revenue doubles to $8.2 billion.
- JD.com Earnings Preview: JD.com, Inc. (NASDAQ:JD) is expected to release its results before Thursday's open, with Wall Street predicting a loss of 3 cents per share and revenue of $50.22 billion, reflecting the challenges and opportunities in the Chinese e-commerce market.
See More
Iran Conflict Triggers Market Turmoil
- Iranian Leader Killed: The U.S.-Israeli operation that resulted in the death of Iran's Supreme Leader Ayatollah Khamenei has led to hundreds of Iranian civilian casualties, marking one of the most significant impacts on Iran since 1979, potentially escalating regional conflicts and altering global political dynamics.
- Market Response: Concerns over the conflict have sharply pulled back stock futures in premarket trading, while gold futures advanced as investors sought safe havens, indicating a strong market reaction to the heightened uncertainty surrounding future developments.
- Berkshire Hathaway Earnings Decline: In Warren Buffett's last quarter as CEO, Berkshire Hathaway reported a nearly 30% drop in operating earnings, primarily due to a 54% decline in profits from its insurance underwriting business, although new CEO Greg Abel's shareholder letter received positive feedback from analysts.
- AI Industry Developments: Trump forced U.S. agencies to cease using Anthropic's technology, while OpenAI secured a deal with the Department of Defense, highlighting intensifying competition in the AI sector; however, Anthropic's Claude AI app surged in popularity, suggesting a potential boost in public support for the company.
See More
