If you had invested $1,000 in Costco stock 10 years ago — you’d be sitting on a massive fortune today

Founded in 1983, Costco has emerged as the world's third-largest retail chain in its 50-year-long run and has demonstrated resilience to changing economic conditions and the challenges posed by e-commerce. Its members cherish Costco for the way the prices of things such as the popular $1.50 hot dog-soda combo have remained unchanged since 1985. But, Costco shareholders have also been rewarded as its stock prices have consistently gone up. According to CNBC, the company’s stock has grown by 59,152% since its IPO, making non-shareholders wonder how much they have lost out on.

Costco has remained a favorite for investors due to its consistent growth, strong business model, and regular cash dividends. This is primarily due to the brand's popularity with younger Americans thanks to its affordable prices, iconic food court, and exclusive signature Kirkland products. Even during the pandemic, shoppers flocked to the warehouse chain to stock up on essentials, allowing the company to post strong numbers. 

How much an initial investment of $1000 in Costco would be worth today

When Costco Wholesale went public in December 1985, its shares debuted with a cost of $10 per share (before stock splits), as per the official website. The share's price as of December 11, 2024, was a remarkable $993.40.

However, as per CNBC's calculation based on the stock price of $908 in September, an investor who put $1,000 in Costco a year ago, saw its value soar 66% to $1,661 as of September 25, 2024. If the same investment was made five years ago, the value would have grown by 230%, and for those who bought shares 10 years ago, the value would have soared by more than 674% and be worth $7,738 as of September 25.

For a fortunate investor who put $1,000 in Costco stock when the company went public, the investment would be worth a whopping $592,512 as of September 25, according to CNBC’s calculations.

Why is Costco's Surging?

Costco has consistently posted a rise in sales and earnings. However, half of the stock's rise in the last five years has come from an expansion in the price-to-earnings ratio (P/E), according to Nasdaq. While typically a P/E ratio of 25 or lower is considered ideal, Costco has a P/E ratio of 61.66 in the current year, as per Nasdaq. 

Even though the company's trailing 12-month earnings nearly doubled in the last five years, the P/E has also remained 87% higher with investors willing to pay more. Thus, Costco's stock may be overly popular with investors, according to some analysts.

Nevertheless, the stock’s performance has rewarded investors over the years.

Should one invest in Costco right now?

While Costco has proved its worth and value, Nasdaq estimates that the stock won't keep jumping 200% in value every five years. As per the report, the company's net sales climbed 7% last fiscal year, and net income was up by only 8%.

Furthermore, with a high P/E ratio, investors shouldn't expect the stock to move any higher than the rate of earnings growth in the coming years.