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Yahoo
a day ago
- Business
- Yahoo
Where Will Costco Wholesale Stock Be in 5 Years?
Costco Wholesale is a fantastic business that continues to grow. Investors have steadily pushed its valuation higher since the pandemic years. What goes up may ultimately come down -- a seemingly unthinkable outcome for such a winning stock. 10 stocks we like better than Costco Wholesale › Maybe it's those famous $1.50 hot dog meals, but Costco Wholesale (NASDAQ: COST) continues to flex its muscles. The leading membership warehouse retailer reported impressive numbers in its most recent earnings report, highlighting the company's robust customer base at a time when consumers are pulling back at many other stores. The stock's long-term performance is legendary. Costco's shares have risen by over 600% in the past decade alone. The company was a favorite of the late Charlie Munger, who, alongside Warren Buffett, helped run Berkshire Hathaway for decades. I crunched the numbers to see whether the stock's future is as bright as its past. Here is where I think Costco Wholesale stock will be in five years. Costco Wholesale is a warehouse store, which sells items in bulk and other products not typically found at discount retailers, such as Walmart or Target. And people need a paid membership to shop there. The beauty of Costco's business model is that it sells its merchandise at razor-thin margins, while generating most of its profits from membership fees. Its secret sauce, though, is the brand power it has built. Costco has made its stores destinations for consumers, who sometimes go out of their way to visit their closest one for perks like discounted gas or the company's famous $1.50 hot dog meal. The branding works so well that it doesn't spend any money on marketing, an incredible fact, considering how competitive the retail space is. Chatter has picked up this year about a slowing economy, and some companies have sounded the alarm on consumer spending. Yet Costco's most recent quarter featured an impressive 8% increase in net sales (a 5.8% increase in comparable-store traffic) from the same period a year ago. Paid memberships, Costco's core earnings engine, rose by 6.8%. Costco Wholesale is genuinely a world-class business, so it makes total sense that the stock has performed so well over time. But when a stock price rises faster than the company's earnings grow, the valuation goes up. The stock traded at a price-to-earnings (P/E) ratio between 25 and 35 for several years leading up to the COVID-19 pandemic. But over the past five years, that has steadily risen to nearly 60 times earnings today. The stock's P/E ratio is now higher than it was immediately following the pandemic, when stimulus checks temporarily boosted consumer spending and growth expectations. Currently, analysts expect Costco to grow its earnings by 9% to 10% annually over the long term. Paying such a high valuation for just 9% to 10% annualized growth is probably not sustainable. It sets expectations so high that the stock could abruptly crumble at the first sign of trouble, or the stock could plateau until Costco's earnings grow and catch up to the valuation. I looked five years ahead to see what that might look like. Costco Wholesale has one quarter left in its fiscal 2025. Analysts believe its full-year earnings will come in around $18 per share. Suppose the company grows earnings at a 10% annualized rate from there. That's higher than what analysts currently estimate, but I'm trying to be generous to make a point. Doing the math, Costco's growth in earnings per share would look like: Fiscal year 2026: $19.80 Fiscal year 2027: $21.78 Fiscal year 2028: $23.96 Fiscal year 2029: $26.35 Fiscal year 2030: $28.99 By then, the stock price will depend on what the market values Costco Wholesale at. The stock routinely traded at a P/E of around 30 before the pandemic. If you apply that to Costco's hypothetical 2030 earnings, you'd get a share price of $870. Unfortunately, Costco Wholesale traded at $1,040 per share at the time of this writing. That's why I think the stock will be lower in five years. As great as the company is, there isn't nearly enough growth to justify such a high valuation, meaning there are potentially years of business growth already reflected in the share price today. Unfortunately, even the best companies can be lousy stocks if you overpay, so consider avoiding Costco until the price drops quite a bit. Before you buy stock in Costco Wholesale, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Costco Wholesale wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $657,385!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $842,015!* Now, it's worth noting Stock Advisor's total average return is 987% — a market-crushing outperformance compared to 171% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway, Costco Wholesale, Target, and Walmart. The Motley Fool has a disclosure policy. Where Will Costco Wholesale Stock Be in 5 Years? was originally published by The Motley Fool Sign in to access your portfolio
Globe and Mail
a day ago
- Business
- Globe and Mail
Where Will Costco Wholesale Stock Be in 5 Years?
Maybe it's those famous $1.50 hot dog meals, but Costco Wholesale (NASDAQ: COST) continues to flex its muscles. The leading membership warehouse retailer reported impressive numbers in its most recent earnings report, highlighting the company's robust customer base at a time when consumers are pulling back at many other stores. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » The stock's long-term performance is legendary. Costco's shares have risen by over 600% in the past decade alone. The company was a favorite of the late Charlie Munger, who, alongside Warren Buffett, helped run Berkshire Hathaway for decades. I crunched the numbers to see whether the stock's future is as bright as its past. Here is where I think Costco Wholesale stock will be in five years. Costco's special business model continues to deliver growth Costco Wholesale is a warehouse store, which sells items in bulk and other products not typically found at discount retailers, such as Walmart or Target. And people need a paid membership to shop there. The beauty of Costco's business model is that it sells its merchandise at razor-thin margins, while generating most of its profits from membership fees. Its secret sauce, though, is the brand power it has built. Costco has made its stores destinations for consumers, who sometimes go out of their way to visit their closest one for perks like discounted gas or the company's famous $1.50 hot dog meal. The branding works so well that it doesn't spend any money on marketing, an incredible fact, considering how competitive the retail space is. Chatter has picked up this year about a slowing economy, and some companies have sounded the alarm on consumer spending. Yet Costco's most recent quarter featured an impressive 8% increase in net sales (a 5.8% increase in comparable-store traffic) from the same period a year ago. Paid memberships, Costco's core earnings engine, rose by 6.8%. However, the stock has run ahead of the underlying fundamentals Costco Wholesale is genuinely a world-class business, so it makes total sense that the stock has performed so well over time. But when a stock price rises faster than the company's earnings grow, the valuation goes up. The stock traded at a price-to-earnings (P/E) ratio between 25 and 35 for several years leading up to the COVID-19 pandemic. But over the past five years, that has steadily risen to nearly 60 times earnings today. COST PE Ratio data by YCharts. The stock's P/E ratio is now higher than it was immediately following the pandemic, when stimulus checks temporarily boosted consumer spending and growth expectations. Currently, analysts expect Costco to grow its earnings by 9% to 10% annually over the long term. Here is where I think Costco Wholesale stock will be in five years Paying such a high valuation for just 9% to 10% annualized growth is probably not sustainable. It sets expectations so high that the stock could abruptly crumble at the first sign of trouble, or the stock could plateau until Costco's earnings grow and catch up to the valuation. I looked five years ahead to see what that might look like. Costco Wholesale has one quarter left in its fiscal 2025. Analysts believe its full-year earnings will come in around $18 per share. Suppose the company grows earnings at a 10% annualized rate from there. That's higher than what analysts currently estimate, but I'm trying to be generous to make a point. Doing the math, Costco's growth in earnings per share would look like: Fiscal year 2026: $19.80 Fiscal year 2027: $21.78 Fiscal year 2028: $23.96 Fiscal year 2029: $26.35 Fiscal year 2030: $28.99 By then, the stock price will depend on what the market values Costco Wholesale at. The stock routinely traded at a P/E of around 30 before the pandemic. If you apply that to Costco's hypothetical 2030 earnings, you'd get a share price of $870. Unfortunately, Costco Wholesale traded at $1,040 per share at the time of this writing. That's why I think the stock will be lower in five years. As great as the company is, there isn't nearly enough growth to justify such a high valuation, meaning there are potentially years of business growth already reflected in the share price today. Unfortunately, even the best companies can be lousy stocks if you overpay, so consider avoiding Costco until the price drops quite a bit. Should you invest $1,000 in Costco Wholesale right now? Before you buy stock in Costco Wholesale, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Costco Wholesale wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $657,385!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $842,015!* Now, it's worth noting Stock Advisor 's total average return is987% — a market-crushing outperformance compared to171%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of June 2, 2025
Yahoo
3 days ago
- Business
- Yahoo
Ingram Micro (INGM): Buy, Sell, or Hold Post Q1 Earnings?
Although the S&P 500 is down 2.4% over the past six months, Ingram Micro's stock price has fallen further to $19.13, losing shareholders 17.9% of their capital. This was partly due to its softer quarterly results and might have investors contemplating their next move. Is there a buying opportunity in Ingram Micro, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it's free. Even with the cheaper entry price, we're swiping left on Ingram Micro for now. Here are three reasons why INGM doesn't excite us and a stock we'd rather own. Examining a company's long-term performance can provide clues about its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Regrettably, Ingram Micro's sales grew at a sluggish 1.3% compounded annual growth rate over the last five years. This was below our standards. Analyzing the change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions. Ingram Micro's full-year EPS dropped 20.5%, or 9.8% annually, over the last two years. We tend to steer our readers away from companies with falling revenue and EPS, where diminishing earnings could imply changing secular trends and preferences. If the tide turns unexpectedly, Ingram Micro's low margin of safety could leave its stock price susceptible to large downswings. If you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. Ingram Micro broke even from a free cash flow perspective over the last five years, giving the company limited opportunities to return capital to shareholders. Ingram Micro falls short of our quality standards. Following the recent decline, the stock trades at 6.3× forward P/E (or $19.13 per share). While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are better investments elsewhere. We'd recommend looking at one of Charlie Munger's all-time favorite businesses. Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth. While this has caused many investors to adopt a "fearful" wait-and-see approach, we're leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
Globe and Mail
3 days ago
- Business
- Globe and Mail
Billionaire Bill Ackman Wants to Be the Next Warren Buffett, and He Is Buying an AI Stock Up 855% in 10 Years (Hint: Not Nvidia)
In 1965, Warren Buffett took control of Berkshire Hathaway. He said that in hindsight it was a "doomed" textile mill "headed for extinction." But he saved the business, and laid the foundation for lasting growth, by shifting its focus to insurance. That brilliant decision created a steady inflow of investable capital in the form of insurance premiums, and Buffett used that cash to great effect over the years. Berkshire's market value has increased more than 5,500,000% since Buffett took control, for an average annual return of 20% over six decades. Buffett deserves much of the credit. He (along with the late Charlie Munger) engineered acquisitions, stock purchases, and share buybacks that ultimately turned Berkshire into a trillion-dollar business, one of only 11 in the world at this writing. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » While Buffett plans to step down as chief executive at Berkshire this year, billionaire Bill Ackman hopes to recreate his success with Howard Hughes Holdings. Ackman recently added another 900 million shares to his hedge fund, bringing his total ownership to 46.9%. He plans to turn Howard Hughes into a "modern-day version of Berkshire" by acquiring controlling interests in private and public companies. If Ackman succeeds, he could become the "next Warren Buffett." Here's the artificial intelligence stock he just bought. Bill Ackman just bought Amazon, an AI stock up 855% in the last decade Bill Ackman ranks among the 20 most successful hedge-fund managers as measured by net gains, according to LCH Investments. And Pershing Square outperformed the S&P 500 (SNPINDEX: ^GSPC) by 24 percentage points over the last five years. Those accomplishments make Ackman an excellent source of inspiration. Importantly, he purchased three stocks during the first quarter: Hertz Global, Uber Technologies, and Brookfield Corporation. Those trades were disclosed in a Form 13F filed last month, but Pershing more recently added Amazon (NASDAQ: AMZN), an artificial intelligence (AI) stock that rocketed 855% over the last decade. Pershing's chief investment officer Ryan Israel said: "We felt that the company would be able to work through any slowdown in the cloud computing division Amazon Web Services, and we did not judge that tariffs would have a material impact on the earnings in the retail business." Interestingly, Ackman has a very concentrated portfolio that included fewer than a dozen stocks as of the first quarter. Chipmaker Nvidia was not one of those stocks. Amazon has three major growth opportunities Amazon's market value exceeds $2 trillion today, but it could be much larger in a few years. The company has a strong presence in three growing industries, as detailed below: Not only does Amazon run the largest online marketplace in the U.S., but it also expects to gain market share this year. Domestic retail e-commerce sales are forecast to increase 8% annually through 2028, according to eMarketer. Amazon is the third-largest adtech company in the world and is rapidly taking share from industry leaders Google (part of Alphabet) and Meta Platforms. Retail ad spending is forecast to increase 17% annually in the U.S. through 2028, according to eMarketer. Amazon Web Services (AWS) is the largest public cloud operator, as measured by infrastructure and platform services spending. Cloud computing sales are forecast to grow at 20% annually through 2030, according to Grand View Research. Importantly, retail advertising and cloud services revenues not only are growing faster than online retail sales, but also have higher margins. That will make Amazon more profitable over time. But the company is also developing about 1,000 generative AI applications that will improve productivity and efficiency across its retail business, from front-end tasks like customer service to back-end tasks like coding. AWS is ideally positioned to monetize AI. It already operates the largest public cloud as measured by revenue and customers, but it has also introduced new products at all three layers of the computing stack. That includes custom chips for AI training and inference at the infrastructure layer, AI-model development tools like Bedrock at the platform layer, and AI applications like Amazon Q at the software layer. That three-tiered strategy is paying off. CEO Andy Jassy recently told analysts: "Our AI business has a multibillion-dollar annual revenue run rate," and "continues to grow triple-digit year-over-year percentages." Most Wall Street analysts anticipate upside in Amazon stock in the next year Amazon shares soared 855% over the last decade as the company built strong positions in online retail, digital advertising, and cloud computing. And Wall Street is still predominantly bullish. Among the 71 analysts who follow the company, 96% rate the stock a buy, and the median target price is $235 per share, which implies 14% upside from the current share price of $205. Wall Street expects Amazon's earnings to increase at 10% annually through 2026. That makes the current price-to-earnings (P/E) ratio of 33 look somewhat expensive. But I think analysts are underestimating the company, as they have in the past -- Amazon topped the consensus earnings estimate by an average of 21% during the last six quarters. Long-term investors should feel comfortable buying a small position today. Should you invest $1,000 in Amazon right now? Before you buy stock in Amazon, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Amazon wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $651,049!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $828,224!* Now, it's worth noting Stock Advisor 's total average return is979% — a market-crushing outperformance compared to171%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of May 19, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors.
Yahoo
4 days ago
- Business
- Yahoo
Charlie Munger Turned $1,000 Into Over $1 Million — And Made His Unemployed Friend Rich Too: 'Trouble With That Story Is It Only Happened Once'
What do you get when you mix $1,000, an unemployed golf buddy, and Charlie Munger's brain? Apparently, a passive income stream that lasted decades. No hedge fund, no Wall Street pitch deck — just Munger, long before his Berkshire Hathaway days, spotting a scrappy oil royalty deal and turning it into one of the most quietly outrageous investments of his life. And the best part? He didn't go it alone — he brought his unemployed friend along for the million-dollar ride. Back in 1962, Munger was still practicing law in Los Angeles when he met Al Marshall, an out-of-work oil industry worker trying to buy mineral rights at auction. Don't Miss: Deloitte's fastest-growing software company partners with Amazon, Walmart & Target – Hasbro, MGM, and Skechers trust this AI marketing firm — Munger, seeing the flaws in Marshall's strategy but liking the bones of the deal, decided to go in with him. Each put up $1,000 and bought into oil royalties through what was then a legal tax shelter known as an AB trust, which was later outlawed. And the returns? Straight-up legendary. "Fifty years later we were getting $100,000 a year on that investment," Munger told the crowd at the 2016 Daily Journal shareholder meeting. "The trouble with that story is that it only happened once." He delivered it with a chuckle, but the message was clear: not every great investment is repeatable — which is exactly why you act when you spot one. Munger touched on the story again during his final Daily Journal meeting in 2023, a full-circle moment near the end of his career, where he once more emphasized the rarity of those life-changing opportunities. Trending: Maximize saving for your retirement and cut down on taxes: . The story is backed by Janet Lowe's 2000 biography "Damn Right!," where Marshall said, "We only put up $1,000 each, and we've each probably made a half a million out of it." He added, "I'm still getting $2,000 to $3,000 a month from that," confirming the checks were still rolling in decades later. That's right — from a $1,000 investment, Munger's family was still cashing royalty checks well into the 21st century. All from a single, overlooked opportunity. Of course, Munger never sugarcoated it. "The trick in life," he told that 2016 crowd, "is when you get the one, or two, or three [big opportunities] that your fair allotment for a life is — that you've got to do something about it." And if you're still grinding toward that first big win? He had advice for that, too: "The first $100,000 is a b*tch, but you gotta do it." Hard work. A sharp eye. A little luck. And when the rare opportunity does show up? Move fast — because even for Charlie Munger, it only happened once. Read Next: Here's what Americans think you need to be considered Shutterstock UNLOCKED: 5 NEW TRADES EVERY WEEK. Click now to get top trade ideas daily, plus unlimited access to cutting-edge tools and strategies to gain an edge in the markets. Get the latest stock analysis from Benzinga? APPLE (AAPL): Free Stock Analysis Report TESLA (TSLA): Free Stock Analysis Report This article Charlie Munger Turned $1,000 Into Over $1 Million — And Made His Unemployed Friend Rich Too: 'Trouble With That Story Is It Only Happened Once' originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved.
