Course Rally 2024: Costco Stocks Defy the Market – Is It Still Worth Investing?

For Costco investors, the year 2024 presents a remarkable development: The retail giant's stock price rose by an impressive 37% by early October, significantly outperforming the S&P 500's 21% gain. Walmart managed an even greater increase with an exceptional 53% rise, demonstrating that above-average profits are possible outside of the technology sectors. Costco's growth is convincing due to its robust, membership-based structure. Last year, the company recorded a comparable sales growth of a notable 6%. Even in economically challenging times, Costco continued to attract affluent customers. Foot traffic increased by 6%, as management reported at the September conference. Particularly positive developments were noted in the e-commerce segment, with a year-over-year increase of 16% and 19% in the last quarter. Notably, luxury goods like jewelry and consumer electronics contributed to this success. Costco plans to further leverage this upswing through online sales of bulky products such as furniture. Financially, Costco relies less on high profit margins. With an operating margin of 3.7%, it lags behind competitors such as Walmart and Target. The stability of profits, however, stems from membership fees, which saw an increase, reaching $4.8 billion last year. For short-term oriented investors, the currently high valuation premium of 54 times earnings compared to 41 for Walmart could be a reason for caution. However, long-term investors have the opportunity to benefit from Costco's continuous market growth. A staggered entry could reduce the risk of a potential downturn amidst high market volatility in 2024. Conclusion: Costco could set further records and remains an attractive choice for long-term-oriented portfolios. Given the high valuation premium, investors should pursue a well-considered decision-making process.