Investors who have owned stocks since 2016 generally have experienced some big gains. In fact, the SPDR S&P 500 (NYSE: SPY) total return in the past five years is 116.7%. But there is no question some big-name stocks performed better than others along the way.
Costco’s Big Run: One company that has been a solid investment in the past five years is grocery retail giant Costco Wholesale Corporation (NYSE: COST). Costco is one of a handful of retailers that have successfully navigated the transformation of the retail sector from offline to online during the Amazon.com, Inc. (NASDAQ: AMZN) era.
Costco has been one of the steadiest, most consistent retail sector performers of the past decade. Its revenue is up 43.5% in the past five years. Total membership is up from 81.3 million in 2015 to 105.5 million today. At the same time, Costco has been able to better monetize those customers by raising monthly membership fees.
The total number of Costco warehouses has grown from 686 in 2015 to 795 today. The company has grown its high-margin executive memberships and rewarded investors with dividend payments along the way, including a handful of large special dividend payments.
At the beginning of 2016, Costco shares were trading at around $160. By mid-2016, Costco shares dropped as low as $138.57, marking their lowest point of the past five years. Fortunately for Costco investors, the share price caught fire from there.
Costco made it up to $245.16 in mid-2018 before dropping back to $189.51 late in the year on fears concerning Costo’s rising costs, including higher wages and increased rewards for cardholders.
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Costco hit $300 for the first time in mid-2019 and made it as high as $325.26 before the 2020 pandemic.
Costco In 2021, Beyond: Fortunately for Costco investors, grocery demand has boomed during the COVID-19 pandemic. Costco shares only dropped down to $275.34 during the March 2020 market sell-off and had rebounded to new all-time highs again by July. The stock has continued its momentum into 2021, soaring as high as $393.15 before pulling back to around $330.
In February, Costco reported January same-store sales growth of 10.9%, suggesting business is still booming heading into 2021.
Costco investors who bought five years ago and held on have generated some impressive returns during one of the hottest market periods in recent history. In fact, $1,000 in Costco stock bought in 2016 would be worth about $2,468 today, assuming reinvested dividends.
Looking ahead, analysts are expecting Target to gain even more ground in the next 12 months. The average price target among the 26 analysts covering the stock is $410, suggesting 24.1% upside from current levels.
(Photo: Open Grid Scheduler/Grid Engine, Flickr)
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