Wholesale retailer Costco (COST) on Wednesday lifted its investors’ mood by raising its quarterly dividend by 13%. However, shoppers also have some good news to latch on to, as Costco has introduced a new high-protein milk drink that is creating a buzz on social media.
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Costco Puts Kirkland Signature in Spotlight
The Washington-based retailer has begun rolling out the drink—a specially filtered, 2% fat, low-calorie option designed for lactose-intolerant customers—at select stores in Austin, Texas. The new product offers 50% more protein and less sugar compared to Costco’s existing 2% lactose-free milk.
The new product is being marketed under Costco’s exclusive, private-label Kirkland Signature store brand, with shoppers expecting it to hit more stores across the U.S. soon. A three-pack of half-gallon cartons sells for $10.59, which some believe offers better pricing compared to rivals, such as Fairlife’s dairy brand products.
The quiet rollout comes as Costco continues to double down on Kirkland Signature, recently rolling out a sparkling energy drink and a cheaper refrigerated dog food product. Many believe the move intensifies competition for Costco’s retail partners Celsius Holdings (CELH) and Freshpet (FRPT), respectively.
‘Growth Runway for Another 50+ Years’
Since the start of the year, Costco’s shares have climbed by more than 14%, ahead of rivals such as Walmart (WMT) (12.21%) and Kroger (KR) (7.18%). However, this is below Target’s (TGT) roughly 27% gain.
Nonetheless, analysts remain largely positive on the wholesale retailer, with some, such as DA Davidson’s Michael Baker recently flagging valuation concerns even though he sees the company — alongside BJ’s Wholesale (BJ) and Walmart (WMT) — collectively expanding their warehouse counts by 70% to 2,500.
Similarly, Bernstein analyst Zhihan Ma recently noted that Costco — which was founded in 1983 — has “stood the test of time” and “has a significant growth runway for another ~50+ years.”
Is Costco stock a buy or a sell?
On Wall Street, Costco’s shares continue to carry a Moderate Buy consensus rating from analysts. This is based on 16 Buys, six Holds, and one Sell issued by 23 analysts over the past three months.
However, the average COST price target of $1,097.28 suggests more than 11% upside.
