Costco expected to outperform S&P 500 for second year, analysts say

Costco Wholesale is predicted to outperform the S&P 500 for the second consecutive year, as analysts point to its strong historical performance and ongoing growth strategies. The retailer has outpaced the S&P 500 in 16 of the past 25 years, boasting a historical win rate of 64%. This trend is expected to continue, with Costco's shares currently trading around $950, despite a recent pullback from its all-time high of nearly $1,094.

This prediction comes at a time when Costco is experiencing significant growth in several key areas. High membership renewal rates—over 92% in the U.S. and Canada, and close to 90% globally—indicate a loyal customer base. In July 2026, the company reported net sales of $23.12 billion, a 10.7% increase from the previous year. Additionally, digitally enabled sales surged by 17.7%, showcasing the effectiveness of Costco’s investment in e-commerce and online services. The company continues to open new warehouses in underpenetrated markets, further expanding its reach.

While Costco's impressive growth is noteworthy, its stock is considered expensive, trading at more than 30 times forward earnings. This valuation could lead to a sharp decline if growth slows, despite the company's solid fundamentals and clean balance sheet. Costco's commitment to returning capital to shareholders through dividends also enhances its appeal, as it has a history of regular dividend growth and occasional special dividends.

As Costco navigates its growth trajectory, investors remain optimistic about its ability to maintain its edge over the S&P 500. The brand's membership model, which generates consistent revenue alongside strong sales, positions it well for the future. With ongoing expansion efforts and a loyal customer base, Costco is poised to continue its trend of outperforming the market, making it a compelling option for long-term investors.