Looking for Exposure to Costco Stock (COST)? Try These Two ETFs

Costco Wholesale (COST) is set for sustained growth, fueled by its membership-based model, strong supply chain, and loyal customer base. Its bulk purchasing power and efficient operations help maintain competitive pricing, driving steady demand. Importantly, Costco maintains over 90% renewal rates, ensuring steady revenue streams. Thus, investors looking for exposure to COST stock may consider investing in these two ETFs: Consumer Staples Select Sector SPDR Fund (XLP) and Vanguard Consumer Staples ETF (VDC).

It is worth mentioning that COST is scheduled to report its fiscal Q3 results on May 29. Currently, analysts expect Costco to report Q3 earnings per share (EPS) of $4.24, up 14.3% from the prior-year quarter. Also, the company’s revenue is expected to increase 8% to $63.13 billion in the quarter.

Let’s take a deeper look at these two ETFs.

Consumer Staples Select Sector SPDR Fund

The XLP ETF tracks the Consumer Staples Select Sector Index. It includes companies involved in food and drug retailing, beverages, household products, tobacco, and personal care. Importantly, COST accounts for 10.54% of XLP’s total holdings.

Some of the top holdings in XLP ETF include Walmart (WMT), Procter & Gamble (PG), and Coca-Cola (KO). Overall, the ETF has $16.21 billion in assets under management (AUM) and an expense ratio of 0.09%. Year-to-date, the XLP ETF has generated a return of 4.35%.

On TipRanks, XLP has a Moderate Buy consensus rating based on 23 Buys and 17 Holds assigned in the last three months. At $87.16, the average XLP ETF price target implies 6% upside potential.

Vanguard Consumer Staples ETF

The VDC ETF tracks the performance of large-cap consumer staples companies, such as food, beverage, household goods, and retail giants. These firms tend to be less volatile and maintain consistent demand, even during economic downturns. COST stock constitutes 12.67% of the ETF’s holdings.

Apart from COST, some of the top stocks in the VDC ETF are Walmart, Philip Morris (PM), and Coca-Cola. Overall, the ETF has $7.51 billion in AUM. Also, it has an expense ratio of 0.09%. The VDC ETF has returned 4.9% so far this year.

Turning to Wall Street, the ETF has a Moderate Buy consensus rating. Of the 104 stocks held, 57 have Buys, 45 have a Hold, and two have a Sell rating. At $237.47, the average VDC ETF price target implies a 6.69% upside potential.

Concluding Thoughts

ETFs provide indirect exposure to COST, reducing risk compared to investing directly in the stock. Furthermore, ETFs are a liquid and transparent way to participate in the market. Investors seeking ETF recommendations might consider XLP and VDC, as these ETFs offer exposure to Costco stock.