Costco Wholesale (NASDAQ: COST) has delivered a remarkable 481% return over the past decade, cementing its reputation as one of retail’s most dependable long-term investments.
The warehouse giant’s paid membership base has grown every single year without exception, including through the brief but brutal recession of early 2020 triggered by the COVID-19 pandemic.
The National Bureau of Economic Research identified that recession as lasting just two months, from February through April 2020, yet Costco barely flinched in terms of membership growth.
Paid memberships reached 58.1 million for fiscal 2020, ending in August of that year, up from 53.9 million in fiscal 2019 despite the economic chaos surrounding the pandemic.
That upward trajectory has continued without pause through periods of high inflation and consumer stress, with paid memberships now reaching 82.9 million through the fiscal third quarter of 2026.
A core reason for that stickiness is Costco’s remarkable renewal rate, which sits consistently near or above 90%, reflecting how deeply members value the savings the warehouse model delivers.
Costco’s business model is built around razor-thin margins that create a powerful competitive moat, with net sales of $203 billion through the first three quarters of fiscal 2026 against merchandise costs of $181 billion.
After paying operating expenses and taxes, the company’s net profit margin came in at just 3% over the last year, a figure that makes the model extremely difficult for any competitor to replicate without enormous financial strain.
Costco continuously reinvests its profits into better deals for members, creating a self-reinforcing cycle of high-volume sales, strong value, and loyal repeat customers that few retailers in the world can match.
Lower prices attract new members and keep existing ones renewing year after year, which in turn funds the buying power needed to negotiate even better deals from suppliers.
The business case for Costco as a long-term hold is difficult to argue against, but the stock’s current valuation introduces a meaningful complication for investors considering a new position today.
Shares currently trade at 47 times trailing earnings, a significant premium compared to the 30 price-to-earnings multiple the stock carried a decade ago.
That elevated multiple looks harder to justify when Wall Street’s average estimate points to earnings growth of roughly 11% annually going forward.
Investors weighing a purchase today need to account for the real risk that the stock could underperform if the price-to-earnings ratio reverts toward its historical average over time.
For those with a long-term outlook, Costco remains a high-quality business with a durable competitive advantage, but patience in waiting for a more attractive entry price could prove worthwhile.
