Costco Wholesale has been a rewarding investment for investors. It would have made early investors millionaires, but even if you had bought the stock in 2015, you would still be outperforming the S&P 500.
A $1,000 investment in Costco stock 10 years ago would be worth about $6,400 today, assuming you bought more shares with the dividend. This beats the $4,000 you would have earned investing in an S&P 500 index fund.
But what about an investor buying shares today? Here's what an investor can reasonably expect to earn over the next 10 years.
Costco has been steadily growing its member base for years, and it currently has 146 million cardholders. It may have a long runway for continued growth, particularly as it expands its store presence in the U.S. and internationally.
However, investors should be aware that much of the stock's return over the last 10 years was due to investors paying a higher multiple for the company's earnings per share. Costco's price-to-earnings ratio has increased by more than 50% since 2015, and is currently trading at 46 times its trailing-12-month earnings.
