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Here's How Much You'd Have If You Invested $1000 in Costco a Decade Ago

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For most investors, how much a stock's price changes over time is important. Not only can it impact your investment portfolio, but it can also help you compare investment results across sectors and industries.

Another factor that can influence investors is FOMO, or the fear of missing out, especially with tech giants and popular consumer-facing stocks.

What if you'd invested in Costco (COST - Free Report) ten years ago? It may not have been easy to hold on to COST for all that time, but if you did, how much would your investment be worth today?

Costco's Business In-Depth

With that in mind, let's take a look at Costco's main business drivers.

Based in Issaquah, Washington, Costco Wholesale Corporation sells high volumes of foods and general merchandise (including household products and appliances) at discounted prices through membership warehouses. It is one of the largest warehouse club operators in the United States. The company also operates e-commerce websites in the United States, Canada, the United Kingdom, Mexico, Korea, Taiwan, Japan and Australia.

The company’s warehouses offer an array of low-priced nationally branded and select private labeled products in a wide range of merchandise categories. Costco offers three types of memberships to its customers: Business, Gold Star (individual), and Executive.

As of Jul 13, 2021, Costco operates 810 warehouses, comprising 559 in the United States and Puerto Rico, 105 in Canada, 39 in Mexico, 30 in Japan, 29 in the United Kingdom, 16 in Korea, 14 in Taiwan, 12 in Australia, three in Spain, and one each in Iceland, France, and China.

Costco generates revenue from two sources: 1) Store sales (Net sales; 97.9% of fiscal 2020 total revenue) and 2) Membership fees (MFI; 2.1% of fiscal 2020 total revenue).

Costco offers myriad varieties of food products as well as a vast range of household and lifestyle products, stationeries and appliances. The company also sells gasoline to customers at cheap prices and offers merchandise in the following categories:

Food and Sundries (including dry foods, packaged foods, groceries, snack foods, candy, alcoholic and nonalcoholic beverages, and
cleaning supplies)

Hardlines (including major appliances, electronics, health and beauty aids, hardware, and garden and patio)

Fresh Foods (including meat, produce, deli, and bakery)

Softlines (including apparel and small appliances)

Ancillary (including gasoline and pharmacy businesses).

Bottom Line

Putting together a successful investment portfolio takes a combination of research, patience, and a little bit of risk. For Costco, if you bought shares a decade ago, you're likely feeling really good about your investment today.

A $1000 investment made in August 2011 would be worth $5,686.05, or a gain of 468.61%, as of August 5, 2021, according to our calculations. This return excludes dividends but includes price appreciation.

Compare this to the S&P 500's rally of 266.87% and gold's return of 4.81% over the same time frame.

Analysts are forecasting more upside for COST too.

Shares of Costco have risen in the past three months. The company’s growth strategies, better price management, decent membership trend and increasing penetration of e-commerce business reinforce its position. The strategy to sell products at discounted prices has helped draw customers seeking both value and convenience. These factors have been aiding in registering impressive sales and earnings numbers. Costco put up a decent performance in third-quarter fiscal 2021. Both the top and the bottom lines beat the Zacks Consensus Estimate and grew year over year. Notably, mass inoculation drive and stimulus package have triggered spending across the board. Also, Costco maintained stellar comps run. However, margins still remain an area to watch. Any deleverage in SG&A rate as well incremental wages and sanitation costs cannot be ignored.

The stock has jumped 7.50% over the past four weeks. Additionally, no earnings estimate has gone lower in the past two months, compared to 2 higher, for fiscal 2021; the consensus estimate has moved up as well.

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