Key Points
Costco dominates the general merchandise retail industry with its global presence and huge sales base.
The company's shares have trounced the market in recent years.
Members, revenue, and earnings will be higher in the future.
Some businesses need no introductions. Costco (NASDAQ: COST) is one of them. It's a massive retail enterprise that has a global presence. Households love the company. And shareholders have been rewarded with huge gains.
Costco has made for a fine investment. Had you invested $10,000 in this retail stock exactly five years ago, here's how much you'd have today.
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Making money in retail
The retail sector is arguably the most competitive market. Customers can spend their money anywhere, with zero switching costs. It's difficult to create a differentiated business model. Margins are generally very thin. And it's hard to forecast changing consumer tastes, making inventory management a continuous challenge.
But Costco stands out. It proves that money can be made investing in this industry. In the past five years, the dominant retailer's shares have produced a total return of 182% (as of Sept. 30). A $10,000 investment initiated back then would be worth over $28,000 today.
Strong financial performance
The economy has faced many headwinds since 2020, such as the pandemic, supply chain bottlenecks, rising inflation, higher interest rates, and changing trade policies. Costco still found great success. Its membership base, revenue, and earnings per share in fiscal 2025 (ended Aug. 31) were all markedly higher than in fiscal 2020.
There's no reason to believe this positive trend will let up as we look toward the future.
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Neil Patel 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.
