Investors who have owned stocks in the past year have generally experienced some big gains. In fact, the SPDR S&P 500 ETF Trust (NYSE:SPY) total return over the past 12 months is 16.3%. But there is no question some big-name stocks performed better than others along the way.
Costco's Big Year: One company that has been a strong investment in the past year has been membership-only retailer Costco Wholesale Corporation (NASDAQ:COST).
Costco has generated industry-leading growth and market-beating returns for years now, and recent quarters have been no different. Its membership-based, low-cost model makes it difficult for companies to compete with Costco's value and Costco's membership fees are also a primary source of high-margin revenue for the company.
Costco may not be the most exciting company or stock in the market, but its stellar business model has been a consistent source of returns for long-term investors. Costco currently has more than 113.1 million cardholders covering 62.5 million households.
While many other retailers are struggling to gain back their pre-COVID-19 pandemic business, Costco’s business is booming, including 16.6% revenue growth, 15% same-store sales growth and 14.3% online sales growth in the fiscal first quarter.
Unfortunately, Costco's stock has performed so well in recent years that it has gotten a bit pricey for a retailer, trading at nearly 37 times forward earnings.
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At the beginning of 2020, Costco shares were trading at $294.06. By the beginning of March, the stock was still trading around $294 as news of the coronavirus spreading in China prompted concerns about a U.S. pandemic.
When the market crashed during the U.S. COVID-19 outbreak in March, Costco shares dropped as low as $271.20 during the height of the pandemic fears.
When the market bounced off pandemic lows, Costco began to rebound as well. The stock returned to its pre-pandemic highs of around $325 by July and broke out to new highs in early August, eventually reaching a 2020 high of $393.15 in November.
Costco In 2021, 2022, Beyond: Costco stock pulled back to as low as $307 in March 2021 before regaining its bullish momentum. The stock hit $400 in July, $500 in November and an all-time high of $571.49 in December. Today, shares are hovering around $519.
Costco investors who bought one year ago and held on hoping for a big 2021 performance have generated an impressive return on their investment at this point. In fact, $1,000 in Costco stock bought on March 1, 2021, would be worth about $1,580 today, assuming reinvested dividends.
Looking Ahead: Analysts are expecting more gains from Costco in the next 12 months. The average price target among the 28 analysts covering the stock is $567.50, suggesting a 8.9% upside from current levels.
