Is Costco a Buy, Sell, or Hold in 2025?

Key Points

• Costco has one of the strongest business models in retail.

• The stock has grown in part through multiple expansion.

• The company is opening new stores and delivering strong same-store sales growth.

• 10 stocks we like better than Costco Wholesale ›

Costco Wholesale (NASDAQ: COST) is not only one of America's favorite retailers. It's also been a top retail stock to own over its history.

Over the last decade, it's up 570%, easily outpacing the S&P 500's increase of 240%, and most investors would argue that Costco is lower-risk than the broad-based index. After all, the retailer is a classic defensive stock. As a consumer staples company, it sells primarily products that people need, like groceries, paper products, and health and beauty products. It's also known for its buy-in-bulk bargain prices, which attract consumers in both good times and bad.

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

Costco has actually underperformed the market this year as it's up just 4% through Sept. 19, pulling back from its recent peak. Is this a buying opportunity for the retail giant? Let's take a look at the arguments to buy, sell, or hold Costco.

Image source: Getty Images.

Buy Costco

Costco is one of the most, if not the most, reliable retailers in the industry. It's the leader in the membership-based warehouse retail sector, well ahead of competitors like BJ Wholesale and Walmart's Sam's Club.

Costco regularly ranks among the top in customer satisfaction among retailers, and it has a strong renewal rate, at 93% in fiscal 2024 in North America and 90.5% globally.

Costco's business model has also proven to be rock-solid in any market, and its low prices keep customers coming back. The company makes most of its net income through membership fees, essentially selling goods at near-cost to incentivize buying memberships.

That's created a wide economic moat as it has grown its membership base by about 10% annually in recent years. Costco is also continuing to open new stores, expanding its footprint in the U.S. and internationally. Given the demand for new stores, as well as its growth in e-commerce, Costco's growth runway appears to be longer than it is for most large retailers.

And given the stability of its business, Costco is a great bet to deliver steady growth, which is why it trades at a premium.

Additionally, Costco also has a track record of paying special dividends every three years or so, rewarding shareholders.

Sell Costco

Costco's results speak for themselves. The company has a long track record of delivering steady same-store sales growth and expanding profits.

However, Costco's growth seems to be generously priced into the stock at this point as it trades at a price-to-earnings ratio of 54, which is more expensive than about any other brick-and-mortar retailer.

Costco trades at a premium in part because the business is so reliable, but the stock's growth has been driven over the years by multiple expansion, rather than just earnings growth. A stock can't grow like that forever, and that might explain why Costco has underperformed the S&P 500 this year.

A good business alone isn't enough of a reason to buy a stock. It has to trade at a good value as well.

Hold Costco

Costco is a classic buy-and-hold stock. While it could go through ups and downs according to market trends and company-specific events, it has a business model that should continue to endure despite pressure from e-commerce or potential economic turmoil.

Given the balance between the success of the business and the high valuation, holding the stock makes sense.

What's the verdict?

Under normal circumstances, there's a good argument for Costco being a long-term buy, but the stock is expensive enough, at double the price-to-earnings ratio of the S&P 500, that there's better value to find elsewhere.

Holding Costco looks like the best option now. While it could underperform the market in the short or even medium term, it still looks like a winner over the long term.

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 $661,694!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,082,963!*

Now, it’s worth noting Stock Advisor’s total average return is 1,067% — a market-crushing outperformance compared to 190% 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 September 22, 2025

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