projected Costco share prices over the subsequent five years

Costco, the popular warehouse club, raised its membership fees for the first time in seven years last September. Despite the fee increase, the retail giant continues to attract customers and maintain a strong position in the market.

Costco's memberships are made more appealing with ancillary services like food courts, gas stations, vision centers, and hearing centers. These additional offerings contribute to the stickiness of the membership, encouraging customers to visit Costco more frequently.

Costco's stock isn't exactly a bargain, trading at 52 times this year's earnings. However, the company's business model allows it to sell products at nearly break-even margins due to annual membership fees. This strategy has proven successful, as Costco remains a top shopping destination, even during the COVID-19 pandemic.

Costco carries a narrower selection of products but rotates them frequently with a "treasure hunt" strategy. This approach keeps the shopping experience fresh and exciting for customers while minimising the need for excessive storage space.

Costco promotes its private label, Kirkland, as a cheaper alternative to name brands. This strategy has been successful in attracting cost-conscious consumers, especially during periods of inflation, such as from 2021 to 2023.

As of the end of the third quarter in fiscal 2025, Costco had 905 warehouses. The company's business growth is indicated by increasing comparable sales, warehouse openings, cardholders, and high renewal rates from fiscal 2020 to fiscal 2024. In the third quarter of fiscal 2025, Costco's global renewal rate was 90.2%.

Costco's stock (NASDAQ: COST) current price is $942.82, with a market cap of $418B. Analysts expect Costco's net sales and EPS to grow at a CAGR of 8% and 10%, respectively, from fiscal 2024 to fiscal 2027.

Costco's gross margin dipped from 11.2% in fiscal 2020 to 10.9% in fiscal 2024. However, the company has been able to maintain a gross margin of 12.78%. Costco negotiates bulk rates with suppliers to keep prices low, which helps to offset the impact of decreasing gross margins.

Costco's dividend yield is 0.52%. The company can continue to outperform competitors in the next five years by leveraging advanced technology for operational efficiency, maintaining strong membership loyalty, expanding its product assortment, and focusing on cost leadership strategies that keep prices low for customers.

Costco's total cardholders count was 142.8 million in the third quarter of fiscal 2025. With a strong track record of growth and a promising future outlook, Costco is well-positioned to continue its success in the retail industry.