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Stock Strategist

Looking for Value From Costco? Buy a Membership, Skip the Shares

The trading price implies performance ahead of our already lofty targets.


While a Costco (COST) membership is a passport to 72-pound cheese wheels and 8-foot-tall stuffed plush toys at low prices, the bargains do not extend to the shares, in our view. Our lack of enthusiasm for the current stock price doesn’t indicate an unfavorable attitude toward the company, though. We comfortably award Costco a wide economic moat rating, and our short-term forecasts are actually above FactSet consensus. The source of the discrepancy likely lies with our long-term top-line and margin forecasts, or the expected durability of economic profits.

Zain Akbari does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.