The fear of missing out is a powerful motivator. We never want to feel like the only fool who missed out on a great deal or a smart investment decision. This feeling has convinced many people to participate in questionable and downright silly money-making schemes and investment ideas. On the other hand, with perfect hindsight, we can kick ourselves for not investing in successful companies when they first started out. For example, why didn’t you invest in Apple when it was a small company in a garage?
One of the most successful companies in the grocery industry is Costco. If you had known, at the time it went public, that Costco would be as big as it is today, how much money would you have made? If you invested $15,000 in Costco just 10 years ago, how much would that investment have grown?
For this article, we used public stock and company data available from stock reporting sites and trading institutions.
Background on Costco
A Costco warehouse front.
Costco is a membership-only store chain that generates most of its revenue from membership fees and low-cost, bulk purchases of groceries and home goods. In order to shop at Costco, customers must purchase a membership to the company. The popularity of Costco’s bulk sizes and cheap food offerings at their in-store food counters have made Costco one of the most successful and influential warehouse membership companies in the world.
Among the most popular items available in Costco are Costco’s own Kirkland Signature branded items which replace many of the name-brand alternatives.
According to the company, no regular product can be priced higher than 14% over its cost, and no Kirkland Signature product can be priced higher than 15% more than cost. This results in a very low profit margin of only 2%, but the volume of purchases and membership fees more than make up for it. In fact, with three different membership levels, the fees from warehouse memberships account for more than 80% of Costco’s entire gross margin.
Besides the extremely famous (and popular) whole chickens and hotdogs, Costco’s business model has proved reliable and successful, especially when it comes to investment options.
The History of Costco Stock
The front of a Costco warehouse.
Costco opened its first warehouse in Seattle in 1983 and went public just two years later in December of 1985 with 17 warehouses and 1,950 employees. It has grown internationally with over 874 warehouses as of February 2024, with locations all over the world including six in China, four in Spain, 14 in Taiwan, 33 in Japan, two in France, and many more.
Costco went public at a price of $10 per share and rose to an all-time closing price high on March 7, 2024, reaching $785.59 per share. The latest closing price, as of the writing of this article, was $734.20 per share.
The average price for Costco stock for the last 52 weeks is around $581.
How Much Would You Have?
A Costco warehouse after hours.
If you bought Costco stock ten years ago, in March of 2014, how much money would you have made? For this question, we will assume you invested $15,000 in one purchase order for Costco stock and held onto those shares until today.
On March 20, 2014, the stock price for Costco closed at $113.16. The highest closing price for the year was $143.49 and the lowest was $110.18.
If you had $15,000 lying around, you would have been able to buy around 132.5 shares of Costco stock. If you didn’t sell any of your shares, that original $15,000 would now be worth $98,190.
Of course, the value of your investments might not reflect the actual cash you would receive if you sold your shares today, depending on the broker you used to buy and sell those shares. Many brokers used to charge hefty fees and commissions for buying and selling stock, but with the introduction of Robinhood’s zero commission business model, other companies began offering trades for free too.
Should You Buy Costco Today?
Customers entering Costco.
Costco remains a reliable and safe investment option. It has maintained an upward price trajectory for the last few years. Investment advisors and professional investors generally agree that Costco is a great buy option for those seeking a new stock, or a hold option for those who already own Costco shares.
Among the most optimistic investors are those who believe that Costco can reach as high as $600 per share in the next twelve months. Costco’s past performance seems to reinforce these predictions.
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