1 Incredible Reason to Buy Costco Stock Before Sept. 25

Key Points

• The retailer has established an excellent foundation for its business.

• It's the factor that gives it the flexibility to keep its merchandise prices so competitive.

• 10 stocks we like better than Costco Wholesale ›

Costco Wholesale (NASDAQ: COST) stores are ideal places to find deals on goods. However, on a valuation basis, Costco stock isn't cheap. It's forward price-to-earnings ratio is around 47, which is notably high for the retail industry.

One attractive feature sets it apart from most other retailers, and it provides the company with a solid foundation for those ever-competitive prices. It's a robustly growing metric, and I predict it will tick higher again in the now completed fiscal fourth quarter (to be reported on Sept. 25).

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Image source: Getty Images.

Members only

Cutting straight to the chase, that highly appealing feature is Costco's membership model. To shop at its warehouse store, one must be a member. Each level of annual membership subscription -- Gold Star (i.e., standard), business, and executive -- confers a different set of benefits to the person holding it.

This model also confers many benefits upon Costco. For one, it produces a steady stream of extremely high-margin revenue for the company, which provides it with the ability to keep its merchandise prices competitive.

It also ensures a relatively high degree of customer loyalty, since sensible Costco members are going to shop there regularly, not least to justify paying those annual fees, which range from $65 for Gold Star to $130 for the executive tier.

Quite a popular club

And the number of people who want to shop at Costco keeps increasing. In its most recently reported fiscal quarter, its paid membership rolls swelled by around 5.1 million people, or 7%, year over year, to a total of nearly 80 million. This, by the way, was in spite of the chain hiking its membership fees near the end of 2024 -- its first such increase since 2017.

Membership fees alone reaped $1.24 billion for Costco that quarter. Also, since they're growing, I firmly believe the retailer's fundamentals will keep defying gravity, too. Yes, Costco stock is relatively expensive, but often, investors have to pay a premium for a unique operator that has grown robustly -- and will likely continue doing so.

Should you invest $1,000 in Costco Wholesale right now?

Before you buy stock in Costco Wholesale, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Costco Wholesale wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $651,599!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,067,639!*

Now, it’s worth noting Stock Advisor’s total average return is 1,049% — a market-crushing outperformance compared to 185% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of August 25, 2025

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.