Investors are showing renewed interest in Costco (COST) below the $1,000 mark. Shares climbed 3% last week after the company reported an impressive 8.5% year-over-year increase in July net sales. Following a technical breakout, the stock now sits above key moving averages, including the 50-day and 200-day, which could act as new support levels.
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The high-conviction market reaction to Costco’s strong July sales data confirms the business’s fundamental momentum is intact. This provides a justifiable basis for its premium valuation and suggests a path of least resistance to the upside despite the psychologically important $1,000 mark.
While the great debate remains focused on Costco’s premium valuation, I propose that the retailer’s recession-resilient business model and the strength of its membership flywheel are likely to keep the momentum working in its favor, making me decidedly Bullish on its stock.
Corporate Developments Boost COST Outlook
Last week was a bumper harvest for retail sector stocks, with Costco’s peers, such as Walmart (WMT) and Target (TGT), experiencing mid-single-digit percentage share price gains.
Last week, Costco’s narrative was driven by one powerful data point that underscored its operational excellence and market strength. In July, the company posted $20.89 billion in sales, up 8.5% from $19.26 billion a year earlier. Comparable sales growth was strong across all segments—U.S., Canada, and total company—while e-commerce comp sales stood out at +14.9%. That’s notable given the long-standing question of Costco’s ability to compete in the digital arena.
This growth stems from sustained investments in logistics. The $1 billion acquisition of Innovel Solutions in 2020 boosted large-item delivery efficiency, cutting delivery times from two weeks to just a few days in some cases. Costco has also leaned into partnerships with Maplebear (CART) and Uber (UBER) for faster grocery delivery and expanded Buy Online, Pick Up In-Store (BOPIS) for cost-efficient, high-value transactions.
The company is also leveraging its vast member data to personalize the shopping experience—something brick-and-mortar retailers couldn’t easily do a few years ago. For example, a member who bought a Mother’s Day gift last year might receive a targeted promotion this year. Convenience is further enhanced with Buy Now, Pay Later (BNPL) options, making big-ticket items more accessible. Combined with high-margin, subscription-like memberships, these modern capabilities help explain why Costco now commands valuation multiples closer to tech leaders than traditional retailers.
Retail Investor Social Following
Another modern-day aspect that supports COST’s premium valuation is its virality, which offers, essentially, free advertising. This is, perhaps, best portrayed by Reddit’s subreddit (r/Costco), which boasts 1.4 million members (top 1% by size). This community of shoppers has an overwhelmingly positive sentiment toward the company, with a discussion dominated by new product finds and tips for improving them. Other highly engaged topics include praise for excellent customer service, with one viral post titled, “Costco manager saved my dad’s life.”
Within investment-focused subreddits, the primary topic is the “crazy overvalued” P/E ratio of over 50. Indeed, COST’s P/E of 56 trades at a 227% premium to its peers in the Consumer Staples sector. One camp believes the company’s “cult-like following” and bulletproof membership model justify this premium price. At the same time, the other side dismisses the stock’s performance as a product of “hype investing instead of value investing.”
In another forum (TradingView), one user encapsulates the view of many long-term bulls: “You don’t get many chances to buy Costco, so when you get a somewhat substantial cyclical dip, you take it.”
Is COST Stock a Good Buy?
On Wall Street, Costco sports a consensus Moderate Buy rating based on 16 Buy, nine Hold, and zero Sell ratings in the past three months. Its average price target of $1,110.58 implies an upside potential of 12.98% over the next 12 months.
Over the past week, analysts have either held their price targets on COST or have raised them. Analyst Phillip Blee has a Buy rating on COST with a price target of $1,137, noting “Despite concerns about the company’s elevated valuation, the consistent demand and stability offered by Costco make it an attractive investment, especially in an uncertain macroeconomic environment. Investors appear willing to pay a premium for the reliability that Costco provides, positioning the company well for future success.”
Costco Nears $1,000 Price Target as Expectations Grow
Costco’s July sales report boosts bullish sentiment on its stock, which now trades over key moving averages and is nearing the psychologically important $1,000 level. In the context of widespread concerns about a consumer slowdown impacting retailers, Costco’s underlying strength validates that its model is more resilient and dominant than ever.
On the flip side, caution is warranted, too. The stellar July sales report has dramatically raised expectations for the upcoming September earnings.
Should Costco underwhelm, its premium valuation may be pushed back to earth. In the meantime, it would not surprise me to see COST’s stock outperforming ahead of its fiscal fourth quarter 2025 report.