Year-to-Date Gains: 16% (vs. 17% for S&P 500)
If slow and steady wins the race, Costco is at least a contender. The best way to describe the giant company — sporting a market cap just under $50 billion — is solid.
Back in May, Costco reported strong third-quarter numbers, including a 19% improvement in net income on the back of increased sales and more money from membership fees. And while most names in the general retail sector have seen full-year expectations slowly pared over the last few months, Costco’s bar has at least been moving in the right direction — even if just by pennies.
That will only translate to earnings growth of 5% in the current quarter, though — part of the reason I said solid, not stellar. Plus, despite its decent track record and today’s jump, it’s still lagging the broader market over the past 12 months.
Over the next five years, analysts expect the company to post annual growth over 13%. The good news: That’s better than the sub-12% annual growth that translated to sold 13% annual gains over the past five years. But while that kind of climb — and consistency — is nothing to sneeze at, it also might not be enough to justify the current price tag that’s 22 times next year’s earnings estimates.