Costco Stock Breaks 52-Week Record: Buy, Hold or Take Profits?

Core Viewpoint - Costco Wholesale Corporation has reached a new 52-week high, raising questions about whether to take profits or remain invested, driven by strong fundamentals such as membership growth and pricing power [1][2]. Performance Metrics - The stock hit a peak of $1,009.61, closing at $1,005.83, reflecting a 41.4% increase over the past year, outperforming the industry and S&P 500, which rose 21.8% and 23.8% respectively [2]. - Costco's stock is currently trading above its 50-day and 200-day moving averages, indicating strong upward momentum and price stability [5]. Membership and Pricing Power - Costco's membership model is a key revenue driver, with renewal rates exceeding 90% in the U.S. and Canada, showcasing customer retention through competitive pricing and quality products [7]. - Comparable sales growth was reported at 7.4% in December, following increases of 3.1% and 5.1% in the preceding months [8]. Operational Efficiency - The company maintains low operating costs while delivering high-quality goods, allowing it to operate on thin margins but with greater volume [9]. - Costco opened six net new warehouses in the first quarter of fiscal 2025, with four located outside the U.S., indicating international expansion [9]. E-commerce Growth - E-commerce comparable sales grew 13% in the first quarter, driven by Costco Logistics, which specializes in large items, and the U.S. app saw 2.9 million downloads in the quarter [10]. Earnings Estimates - The Zacks Consensus Estimate for earnings per share has been revised upward, with current and next fiscal year estimates at $18.01 and $19.66, reflecting year-over-year growth rates of 11.8% and 9.2% respectively [11]. Valuation Analysis - Costco's forward 12-month price-to-earnings ratio is 53.73, significantly higher than the industry average of 33.94 and the S&P 500's 22.46, indicating a premium valuation [14]. - The premium reflects investor confidence in Costco's ability to sustain growth and maintain its competitive edge [15]. Investment Outlook - Costco's strong fundamentals, resilient business model, and consumer loyalty position it well for long-term growth, despite its premium stock price [16].