5 Reasons Costco Stock Will Hit New Highs This Year

Core Insights - Costco's FQ3 earnings report shows an 8.0% adjusted increase in comparable sales, indicating solid performance despite initial market skepticism [1][3] - The company is expected to reach new stock price highs by 2025, driven by strong cash flow and capital returns [2] Group 1: Financial Performance - Revenue grew by 8% year-over-year, surpassing consensus estimates and outperforming competitors in the retail sector [3] - U.S. comparable-store sales increased by 7.9%, while Canadian sales rose by 7.8% and Other International sales grew by 5.5% [3] - Net income increased nearly 13% to $1.9 billion, with expectations of continued strength as the year progresses [4] Group 2: Strategic Outlook - Costco plans to invest in digital and warehouse expansions, with digital sales growing by 15.7% [4][5] - The company is adjusting its supply chain to focus on localized products affected by tariffs [5] - Investments in e-commerce and warehouse automation are underway, including a buy-now-pay-later feature for members [6] Group 3: Dividend and Cash Flow - Costco has a strong history of special dividends, with cash flow increasing by 40% to $13.836 billion, potentially exceeding $15 billion by year-end [8] - The last special dividend was $15 per share, and future payments may be larger if delayed [9] Group 4: Analyst Sentiment - Analysts maintain a Moderate Buy rating, with a 12-month price target of $1,035.32, indicating a potential upside of over 10% [10][11] - Institutional investors own nearly 70% of Costco stock, providing additional support for the company's long-term trajectory [11][12] Group 5: Market Trends - Costco's stock chart appears bullish, remaining in an uptrend despite a 1% pullback after the Q3 release [13] - Key resistance levels are identified near $1,050 and $1,075, which, if surpassed, could lead to new highs [13][14]