Wall Street analysts see multiyear growth potential for Costco — given its stellar business model and other idiosyncratic strengths. It’s a view we share as economic and inflation data keep us guessing . BMO Capital Markets increased its Costco price target to $770 per share from $700 and kept its buy-equivalent outperform rating on the stock. In a note late Tuesday, the analysts cited all the things we love about the retailer from its recent special dividend to consistent traffic patterns to a possible membership fee hike that’s historically overdue. BMO in the same dispatch hiked its price targets on big-box peers Walmart and Target . Costco was a top retail performer for 2023, with shares gaining 45% and outperforming the S & P 500 ‘s 24% increase. The stock has gained 9% this year — roughly double the S & P 500’s advance. After last week’s release of solid January sales, Costco got a slew of price target raises. Costco on Wednesday was trading just below its all-time high of $728-and-change reached last Thursday. COST YTD mountain COST stock price year to date. Costco shares are high in price and also expensive on a valuation basis. ( Check out our commentary on 10 undervalued stocks .) The retailer trades at a price-to-earnings ratio of 43.8 times the next 12 months earnings estimates. That’s higher than its 35.2 times five-year P/E average and near the high end of its historical range. BMO analysts said Costco is “deserving of its premium” valuation due to its “strong return on invested capital, industry-leading sales, and consistency of results and execution.” The analysts listed five reasons for their bullish case on Costco: White space potential: Analysts see “another decade-plus of growth” at Costco given its “significant unit growth expansion potential both in the U.S. and internationally.” Business model: BMO believes Costco has the “best business model in retail” because of its low general merchandise percentage on shelves and continued market…
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