Costco is finally back. The warehouse retailer stock was one of just three Club names in the green in Thursday's ugly market. (Fellow defensive names Cardinal Health and Kimberly-Clark were the other two). While off session highs, Costco's nearly 2% advance put it ever closer to its May record high of $1,094 — a far cry from just a couple of months ago when it appeared stuck below $900. But since bottoming out in mid-September, shares are up more than 19%. The rally in Costco has been driven by two things. First, there has been a rotation into safer stocks and away from the AI trade. While Thursday's obliteration of Wall Street's postelection rally was the most severe example, this has been going on to a lesser extent for weeks. Will it last? Who knows, based on the past two days in the market. The second thing going for Costco is strong company fundamentals — the latest being October sales. It's that second point — one that is far more within management's control — that we want to dig into.…
Costco is taking aim at its May record high — how it got here and where's it going
In short
The retailer generated $24.5 billion in net sales for October, driven by a 7.3% rise in core comparable sales and customer traffic from its record-setting fuel operations. Momentum gained traction after fiscal 2026 fourth-quarter results highlighted improving worldwide renewal rates and a rebound in membership growth. However, trading at nearly 47 times fiscal 2027 earnings estimates leaves the stock vulnerable to any operational missteps.
Key points
- Investors are rotating out of artificial intelligence stocks and into defensive assets wi…: Investors are rotating out of artificial intelligence stocks and into defensive assets with reliable business fundamentals.
- Sequential improvements in worldwide renewal rates and membership growth continue to vali…: Sequential improvements in worldwide renewal rates and membership growth continue to validate the strength of the warehouse model.
- A high valuation of nearly 47 times forward earnings estimates leaves minimal cushion for…: A high valuation of nearly 47 times forward earnings estimates leaves minimal cushion for future operational missteps.