Costco Stock Rallies on December Sales: Buy, Hold or Take Profits?

Core Insights - Costco Wholesale Corporation (COST) has experienced a stock rally following strong December sales, raising questions among investors about whether to buy more, hold, or take profits [1] - The stock has increased by 9.2% since the December sales report, with a 13.3% rise over the past month, outperforming the industry [1][2] - The December sales report indicated solid comparable sales growth and a significant increase in e-commerce, highlighting Costco's operational execution and customer loyalty [1][4] Sales Performance - For the five weeks ending January 4, 2026, Costco reported a 7% year-over-year increase in total comparable sales, with U.S. sales up 6%, Canada up 8.4%, and Other International markets up 10.6% [4] - Net sales for December rose 8.5% to $29.86 billion, compared to $27.52 billion in the same period last year, following previous sales improvements of 8.1% and 8.6% in November and October, respectively [4] Competitive Position - Costco's membership-driven model is a core strength, ensuring high renewal rates and a dependable revenue stream [3][7] - The company benefits from an efficient supply chain and bulk purchasing power, allowing for competitive pricing and reinforcing its market position [3][8] - Costco's ability to adapt to changing consumer preferences and its strategic investments in technology and logistics enhance its multi-channel ecosystem and e-commerce capabilities [9][10] Financial Estimates - The Zacks Consensus Estimate for Costco's current financial-year sales and earnings per share implies year-over-year growth of 7.6% and 11.7%, respectively [11] - Current estimates for sales in the upcoming quarters range from $66.58 billion to $69.80 billion, with year-over-year growth estimates of 8.12% for the current quarter [12] Valuation Analysis - Costco is trading at a forward P/E ratio of 46.31, significantly higher than its industry peers and the S&P 500, indicating strong investor confidence [15][16] - Despite the premium valuation, Costco's consistent performance and loyal customer base may justify the higher price, although it suggests limited room for error [16] Investment Outlook - Costco's December sales results affirm its position as a reliable stock in the retail sector, supported by strong membership growth and solid financial fundamentals [17] - While the stock's premium valuation may deter value-conscious investors, it remains an attractive option for long-term investors seeking quality and stability [17]