Should I Buy Costco (COST)? Finance YouTuber Analysis

The YouTuber advises buying Costco, highlighting its position as a major importer that benefits from reduced tariff costs. They specifically point to Costco as a company to watch for how it handles potential tariff refunds, suggesting this could be a significant, underappreciated catalyst.

“And keep an eye on Costco specifically for how they're going to handle that savings. That could be a catalyst that nobody else really sees coming.” — ▶ 16:00

The YouTuber suggests avoiding Costco due to its high valuation, trading at a P/E ratio of 54.5. While acknowledging its faster growth (10.5% revenue, 15.6% earnings) compared to Walmart, he still considers this multiple extremely high for the growth rate, making it an expensive and potentially risky investment.

“So all around it seems like Costco is growing faster than Walmart, but still for 10% topline growth and 15% earnings growth, a 54 price to earnings ratio is extremely extremely high.” — ▶ 10:30

The YouTuber advises against buying Costco, stating that while it's a fantastic company, its current valuation of 50-60 times cash flows is very expensive. He believes investors are disregarding valuation due to past market performance, but this trend is unsustainable.

“I think Costco is a a fantastic company but I think the price of it is very expensive now.” — ▶ 32:40

The YouTuber views Costco as a solid dividend play with no significant business problems or threat to its dividend, despite the current economic slowdown. However, he notes it's not a high-growth stock and requires patience, suggesting it's not a 10x opportunity.

“If you're looking for a dividend play, this right here is a solid dividend player. I don't think people are going to magically, you know, quit using Costco and Costco's on its way to bankruptcy or anything else of that nature.” — ▶ Watch clip

The YouTuber considers Costco to have the 'best business model in the world' due to its strong customer loyalty, high retention rates, and annuity-like membership income stream, which translates almost purely to profit. While he acknowledges its exceptional qualities, he is currently holding due to its high valuation and would only buy if its P/E ratio drops below 40.

“I will buy Costco when it goes back down to below a 40p ratio when it gets into the 30s. that's at a more reasonable price, a trailing 30p ratio. But when it's at the 60s and50s, that to me is just too extreme.” — ▶ Watch clip

The YouTuber advises against buying Costco shares at current levels, noting its valuation is at the high end of its historical P/E range (55x vs. 33-55x). While acknowledging Costco as a high-quality company with strong fundamentals, he prefers to buy it closer to a 33x forward P/E. He plans to hold his existing position but not add more.

“I wouldn't recommend buying Costco hair. I'm not buying it hair whenever it pays a dividend I invest it into a different company from what I've seen historically Costco trades somewhere between a 33 and a 55 Ford PE ratio so right now at a 55 it is at the high end of that trading radius I'd rather buy the company when it's closer to the 33 range.” — ▶ 22:50

The YouTuber suggests Costco as a 'buy and hold forever' stock, emphasizing its highly defensible business model centered on membership fees rather than sales margins. This model allows Costco to offer the lowest prices to customers while generating stable, predictable profits from memberships, smoothing out retail volatility and making it difficult for competitors like Walmart or Target to replicate.

“Costco is not a seller of goods that's not the way that they view their business model they view themselves as a buying agent on behalf of their customers.” — ▶ 10:20

The YouTuber is bullish on Costco due to its resilient membership-based business model, which generates significant profit from high-retention fees. He highlights the recent membership fee increase as a pure profit driver and notes strong e-commerce expansion, which has higher profit margins. Additionally, Costco is considered a defensive stock with recession resistance, as people continue to buy bulk essentials during economic downturns.

“I'm really bullish on Costco. And I think that right now where it's trading at at, you know, $1,18. If we look at the chart right now, I think that of course it's hard to sell puts on this stock because that would be a lot a lot of um capital. So, not everyone can do that. And Costco does not have the best options. So, I'm looking at Costco as a pure stock play, purely holding stock.” — ▶ 07:00