BING-JHEN HONG Costco ( NASDAQ: COST ), a simple old-fashioned business, continues to shine in a tech-driven market. Somehow, Costco has figured out the recipe for high-single-digit growth in almost every environment. That, combined with dedicated members and extraordinary management, results in one of the most predictable and resilient companies in the world.
Still, at some point, the multiple expansion story will have to come to an end. What will that look like? let's dive in. Revisiting Costco's Recipe For Market-Beating Returns In October of last year, I published an article under the title ' Here's Why Costco Can Continue To Beat The Market Despite Rich Valuation '.
I had a long discussion about Costco's elevated multiple, which stood at 40x on a forward basis back then. In short, there are two reasons a company should justifiably trade in such a high multiple. It either has a very compelling growth story, or it has an extremely predictable and resilient business model, or, a combination of both.
In Costco's case, the predictable part is a much larger portion of the pie, and yet, its growth prospects should not be overlooked. For the last 10 years, Costco grew revenues and EPS at 8.8% and 13.
1% CAGRs. With its unique focus on the customer, a combination of traffic growth, tailored price increases, a growing membership base, and market-share gains, I see nothing that suggests Costco won't continue to do the same for the next 10 years as well. Data by YCharts So, back in O.