Investors who have owned stocks in the last year have generally experienced some big gains. In fact, the SPDR S&P 500 ETF Trust total return over the last 12 months is 28.8 percent. But there is no question some big-name stocks performed better than others along the way.
Costco’s Big Year
One company that has been a strong investment in the past year has been membership-only retailer Costco Wholesale Corporation.
Costco has generated industry-leading growth and market-beating returns for years now, and recent quarters have been no different. Its membership-based, low-cost model makes it difficult for companies to compete with Costco’s value, and Costco’s membership fees are also a primary source of high-margin revenue for the company.
Costco may not be the most exciting company or stock in the market, but its stellar business model has been a consistent source of returns for long-term investors. Costco currently has more than 61.7 million paid members, up from just 53.9 million in fiscal 2019.
While many other retailers are struggling to gain back their pre-COVID-19 pandemic business, Costco’s business is booming, including 16.6 percent revenue growth, 15 percent same-store sales growth, and 14.3 percent online sales growth in the fiscal first quarter.
Unfortunately, Costco’s stock has performed so well in recent years that it has gotten a bit pricey for a retailer, trading at nearly 40 times forward earnings.
At the beginning of 2020, Costco shares were trading at $294.06. By the beginning of March, the stock was still trading around $294 as news of the coronavirus spreading in China prompted concerns about a U.S. pandemic.
When the market crashed during the U.S. COVID-19 outbreak in March, Costco shares dropped as low as $271.20 during the height of the pandemic fears.
When the market bounced off pandemic lows, Costco began to rebound as well. The stock returned to its pre-pandemic highs of around $325 by July and broke out to new highs in early August, eventually reaching a 2020 high of $393.15 in November.
Costco in 2021, Beyond
Costco stock pulled back to as low as $307 in March 2021 before regaining its bullish momentum. The stock hit $400 in July, $500 in November, and an all-time high of $566.55 earlier this month. Today, shares are hovering around $547.
Costco investors who bought one year ago and held on hoping for a big 2021 performance have generated an impressive return on their investment at this point. In fact, $1,000 in Costco stock bought on Dec. 20, 2020, would be worth about $1,503 today, assuming reinvested dividends.
Analysts are expecting little price action from Costco in the next 12 months. The average price target among the 28 analysts covering the stock is $563, suggesting a 3 percent upside from current levels.
By Wayne Duggan
© 2021 The Epoch Times. The Epoch Times does not provide investment advice. All rights reserved.