Costco Wholesale

Costco Wholesale

COST

$ 926.87

$6.86 0.73% 24%

IBD Stock Analysis

• Pulls back to retest 923.83 buy point after Nov. 8 breakout.

Composite Rating

81/99

Industry Group Ranking

115/197

Emerging Pattern

Flat Base

Flat Base

One of three positive chart patterns to look for when doing technical analysis. It usually occurs after a stock has advanced off of a “cup with handle” or “double bottom” pattern. The “flat base” moves straight sideways in a fairly tight price range for at least five weeks and does not correct more than 15%.

* Not real-time data. All data shown was captured at 12:26PM EST on 11/14/2024.

Costco (COST) is the IBD Stock Of The Day as it pulls back near a buy point after an impressive run in 2024.

On Wednesday, analysts at TD Cowen and Evercore ISI hiked their price targets on Costco stock to $975 and $1,010, respectively, FactSet shows. The latest consumer prices data that day showed slow progress in the Fed's fight to tame inflation.

Retail Stocks: Inflation, Thanksgiving, Earnings

Several years of inflation have brought winners and losers among retail stocks.

Both COST stock and Walmart are inflation winners. As Thanksgiving and Black Friday shopping ramps up, consumers continue to look for value and to spend on essential items while foregoing discretionary purchases and splurges.

Incoming President Donald Trump's economic policies leave unclear the direction of consumer spending and inflation in years ahead.

Home Depot (HD) kicked off superstore retail earnings season with solid results on Tuesday. Investors are closely watching the state of consumer financial health.

Lowe's (LOW) and Walmart (WMT) are due on Nov. 19. Target (TGT) is on deck Nov. 20 and BJ's Wholesale Club (BJ) follows on Nov. 21.

Costco next reports in December. The company is famous for warehouse shopping, meaning cheap prices and bulk buys. It is growing online sales as well.

Costco Stock Pullback Opportunity

Shares of Costco dipped 0.8% to 926.89 on the stock market today. A recent pullback has returned Costco stock to just above a 923.83 flat-base buy point, according to MarketSurge pattern recognition. The base rides neatly on support at the chart's 50-day moving average.

IBD added COST stock to Leaderboard on Nov. 8 as it broke out to record highs. Shares of the long-term retail stock winner are in buy range to 970.02.

The relative strength line for Costco stock remains below the peak of the flat base. An RS line moving to new highs along with the warehouse retailer's shares would send a positive sign. A rising RS line means that a stock is outperforming the S&P 500 index.

Other top retailers to watch can be found on the IBD 50 list of top growth stocks. They include Cava (CAVA), which just posted blockbuster earnings, and Sprouts Farmers Markets (SFM).

Costco Earnings: Membership Fee Boost?

The IBD Stock Checkup tool shows that Costco stock is currently the No. 2 discount retailer, behind only Walmart stock, in terms of its IBD Composite Rating.

Costco earns a Composite Rating of 81, RS Rating of 82 and EPS Rating of 86, all out of a best-possible 99. Walmart stock holds a Composite Rating of 87.

In September, Costco beat earnings estimates for its fiscal fourth quarter. Net sales slightly missed views. The company reported cautious consumer spending on higher-ticket, discretionary items like furniture. Grocery and staples demand held up.

During the Costco earnings call, CFO Gary Millerchip said most of the benefit from a recent membership fee increase will come later, in 2025 and into 2026.

The annual Costco membership fee hikes, announced in July and effective Sept. 1, marked the first increase in seven years for customers in the U.S. and Canada.

For fiscal 2025, analysts project Costco earnings will grow almost 8% per share. That would compare to a 17% jump in fiscal 2024, which ended Sept. 1.

Year to date, Costco stock has jumped more than 40% to all-time highs after the membership fee hike. Over the years, COST stock has proved to be a huge retail winner.

IBD previously named Costco as Stock of the Day on Oct. 23 as it tried to break out.

Please follow Aparna Narayanan on X @IBD_Aparna for more coverage.

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