COST (Costco Wholesale Corporation): Themes, ETFs, and Basket Ideas
COST is the ticker for Costco Wholesale Corporation. This page covers what the company does, where it's heading, its approximate earnings and valuation, key competitors, the themes it belongs to, the ETFs that hold it, and similar stocks worth looking at.
What does Costco Wholesale Corporation do?
Costco Wholesale operates a membership-based warehouse club chain. Members pay an annual fee (currently $65 for basic Gold Star, $130 for Executive) for access to Costco warehouses, where they can buy products at lower markups than traditional retailers. Costco operates approximately 900 warehouses globally, with the largest concentration in the United States plus meaningful presence in Canada, Mexico, the UK, Japan, South Korea, Taiwan, Australia, and other markets.
The business model is unusually structured: Costco's gross margins on merchandise are low (typically around 11%, compared to 25%+ for traditional grocers), and most of the company's operating income comes from membership fees, which are essentially pure profit. This aligns Costco's incentives with members: the company makes money when members renew, which happens when members feel they're getting value. Renewal rates exceed 90%. Founded in 1983 (current corporate form from a 1993 merger), headquartered in Issaquah, Washington. Ron Vachris has been CEO since 2024.
Where is Costco Wholesale Corporation heading?
1. Membership fee growth.
Costco raised the Gold Star membership fee from $60 to $65 and Executive from $120 to $130 in 2024, the first increase in seven years. Future increases will follow the same pattern: infrequent, but enormously accretive to operating income when they happen. Each new member is essentially pure profit at the margin.
2. International expansion.
Costco continues to expand internationally, with new warehouses in China, Sweden, France, and other markets each year. International stores often outperform US stores on early-year revenue. The runway for store growth is long.
3. E-commerce and Costco Next.
Costco's e-commerce business is growing faster than warehouse sales but remains a smaller portion of revenue. Costco Next (a curated direct-from-manufacturer e-commerce platform) is the more interesting recent strategic initiative.
4. Inflation-resistant value positioning.
When consumers are squeezed, the value proposition of warehouse club membership strengthens. Costco has historically gained share during recessions because households increase basket sizes and consolidate purchases.
Risks worth tracking: Costco's premium valuation embeds high expectations for continued same-store sales growth and margin expansion. Any consumer slowdown or competitive pressure from BJ's, Sam's Club, or Amazon would compress the multiple.
Earnings and valuation (approximate, early 2026)
A simple financial snapshot. These are approximations and refresh quarterly; for current figures see Costco Wholesale Corporation's investor relations page or your broker.
- Revenue (TTM): ~$260 billion
- Operating margin: ~3.5% (low, by design; membership fees are the profit lever)
- Net income (TTM): ~$7.5 billion
- EPS (TTM): ~$17.00
- P/E (TTM): ~55x
- Price to sales: ~1.5x
- Dividend yield: ~0.5%, with periodic special dividends
- Free cash flow: ~$7 billion annually
- Membership renewal rate (US): ~93%
Costco trades at one of the highest P/E ratios in retail, reflecting the durable membership model, consistent same-store sales growth, and the long runway for international expansion. The premium is also driven by Costco being widely viewed as a quality compounder in retail. The valuation has compressed historically only during severe market drawdowns.
Themes COST belongs to
These are the investment theses COST naturally fits into. Each links to a full theme guide listing every other stock that belongs and the ETFs commonly used as a passive proxy.
ETFs that hold COST
If you want COST exposure as part of a larger bundle rather than directly, these ETFs hold it meaningfully. Weights are approximate and refresh quarterly.
| ETF | Name | % in COST | Expense ratio | |
|---|---|---|---|---|
| QQQ | Invesco QQQ Trust | ~2.4% | 0.20% |
COST's competitors
Membership warehouse clubs
Sam's Club (a Walmart subsidiary) is the closest direct competitor in the US. BJ's Wholesale Club is a smaller specialty competitor concentrated in the eastern US. Internationally, Costco often faces local competition that varies by market.
General retail
Walmart, Target, and Amazon are broader competitors for general merchandise. Costco's value proposition is sufficiently differentiated (membership model, larger pack sizes, curated SKU count) that direct competition is less intense than in traditional retail.
Similar stocks
Other names that show up alongside COST in the same themes. Worth a look if you're thinking about diversification within a single thesis rather than concentration on one ticker.
Also fits Dividend growth. Counter-cyclical off-price model; dividend has compounded through multiple consumer cycles.
Also fits Dividend growth. Diversified cash flow base; dividend growth supported by Azure and software businesses.
Also fits Dividend growth. High free cash flow margin and consistent dividend growth; one of the larger semiconductor dividend payers.
Also fits Dividend growth. Long history of consistent dividend growth; analog business cash flow is structurally stable.
Using COST in a Walnut basket
The most useful question to ask about a single stock is rarely “will it go up?”. It's “does this fit a thesis I actually believe in, and how do I size it alongside other stocks that fit the same thesis?” That's what Walnut is built for.
Open the AI assistant on Walnut and describe a thesis (for example: “the AI infrastructure buildout”, “dividend growth large-caps”, “global semiconductors”) where COST would naturally fit. The AI proposes 5 to 6 constituents with target weights, you review, and you can fund the basket through your broker once you're ready.
Build a basket around COST with Walnut
Use Costco Wholesale Corporation as one constituent in a thematic basket Walnut's AI helps you assemble. Describe a thesis you believe in, the AI proposes the holdings and weights, and you approve before any broker order.
FAQ
What is Costco's ticker symbol?
+
COST, listed on Nasdaq. Officially Costco Wholesale Corporation. Founded 1983, headquartered in Issaquah, Washington. Trades during US market hours, available at every major US brokerage.
Who are Costco's competitors?
+
In membership warehouse clubs: Sam's Club (Walmart subsidiary) and BJ's Wholesale. In broader retail: Walmart, Target, Amazon. The differentiated membership model with high renewal rates makes direct competition less intense than in traditional grocery or general merchandise.
Why is Costco's stock so expensive?
+
P/E of approximately 55x reflects the durable membership model with 93%+ renewal rates, consistent mid-single-digit same-store sales growth, the long runway for international expansion, and the structural advantage that membership fees provide an essentially pure-profit revenue stream. Costco is widely viewed as a quality compounder; the valuation premium has historically held across most market environments.
What is Costco's P/E ratio?
+
Approximately 55x trailing twelve months as of early 2026. Among the highest P/E ratios in retail, reflecting the membership model durability, consistent execution, and long-runway store growth. The premium has been sustained for years.
What does Costco do?
+
Costco operates membership-based warehouse clubs. Members pay an annual fee ($65 Gold Star or $130 Executive as of 2024-2026) for access to Costco warehouses, where they buy products at lower markups than traditional retailers. Most operating income comes from membership fees, not merchandise gross margin. About 900 warehouses globally.
Who owns the most Costco stock?
+
Major institutional holders include Vanguard (~9%), BlackRock (~7%), and State Street (~4%). Insider ownership is low; Costco is broadly institutionally owned and is widely held in quality-compounder and large-cap growth funds.
Is Costco a Consumer Discretionary stock?
+
Yes, under GICS classification. Costco is classified as Consumer Discretionary (Hypermarkets and Super Centers) despite its grocery-heavy mix because of the warehouse-club model and the broad non-food merchandise. Some sources informally treat it as a staples-like business given the membership renewal durability, but every major ETF follows the official GICS classification.
Which ETFs have the most Costco exposure?
+
QQQ holds COST at ~2.4% (Costco is in the Nasdaq-100). VOO holds COST at ~0.6%. VTI at ~0.5%. SCHD has held COST historically when it screens favorably on dividend metrics. XLY (consumer discretionary) does not have COST in top 10 because Amazon and Tesla dominate XLY's top weights, though COST is a holding at lower weight.
Which thematic baskets typically include Costco?
+
Two themes on Walnut. Dividend growth (consistent dividend growth plus periodic special dividends) and Consumer discretionary (the membership warehouse club model is unique and durable within consumer retail). COST is often the largest single holding in quality-compounder baskets.
How much of QQQ is Costco?
+
Approximately 2.4% as of early 2026. COST is consistently a top-10 QQQ holding by weight given its large market cap. In VOO, COST is at ~0.6%. The QQQ weight is higher because the Nasdaq-100 excludes many of the largest financial and consumer-staples names that VOO holds.
Is Costco in the S&P 500?
+
Yes. COST has been an S&P 500 constituent for many years. It is consistently a top-25 S&P 500 holding by market cap and is widely held across passive index funds.
What is Costco's market cap?
+
Approximately $430 billion as of early 2026. Costco has appreciated steadily for decades, becoming one of the largest US retail companies by market cap behind only Amazon and Walmart. The market cap reflects the membership model durability premium.
Does Costco pay a special dividend?
+
Yes, periodically. Costco pays a regular quarterly dividend (yielding ~0.5% as of early 2026) plus periodic special dividends of $5-15 per share announced when the company has accumulated significant cash. Special dividends have been declared every 2-4 years historically. The combination is unusual among large-cap retailers.
Is Costco recession-resistant?
+
Relatively, yes. The membership renewal mechanism and the value positioning have historically held up during economic stress; renewal rates have stayed above 90% through multiple recessions. Trade-down to value retail has typically benefited Costco. The stock is not immune to drawdowns but the underlying business has been more durable than most consumer discretionary peers.
Should I own Costco directly or through QQQ?
+
Both common. Direct COST ownership gives concentrated exposure to the membership model durability plus the periodic special dividends. QQQ includes COST at ~2.4% along with broader Nasdaq-100 tech and growth. Many Walnut users hold COST as a quality-compounder anchor in dividend-growth baskets, alongside diversified ETF positions.
Walnut is informational, not investment advice. Financial figures on this page are approximations; always verify current numbers with Costco Wholesale Corporation's investor relations page or your broker before making investment decisions.