Anyone who dropped six grand into Costco stock back in January 1996 is sitting on a cool million dollars today. That's not hype - it's math. The warehouse retailer has delivered a total return of 16,810% over the past three decades, turning what seemed like a simple investment into life-changing wealth.
But here's the question keeping investors up at night: Can lightning strike twice?
The Numbers Tell a Compelling Story
Costco isn't some scrappy upstart anymore. The company now carries a market cap of $411 billion and pulled in $270 billion in net sales during fiscal 2025, which wrapped up at the end of August. These aren't just big numbers - they're massive, the kind that signal a retail giant operating at full strength.
The warehouse model that made Costco famous continues to work its magic. Stores stock quality merchandise across dozens of categories, all priced to move. This approach doesn't just work when the economy is humming along - it thrives during downturns too. When wallets get tight, shoppers still need groceries, household goods, and gas. Costco's value proposition becomes even more attractive when people are watching every dollar.
The Membership Model Creates Staying Power
What really sets Costco apart is that membership card everyone needs to shop there. It's not just a revenue stream - it's a moat. In the United States and Canada, the membership renewal rate hit 92.2% in the first quarter of fiscal 2026, which ended November 23. That's not a typo. More than nine out of ten members decide to stick around year after year.
The company counted 81.4 million paid memberships in that same quarter, up 5.2% from the previous year. Management isn't content to coast on those numbers either. They're planning to open 30 new warehouses annually, a clear signal that even after decades of expansion, they still see room to grow.
Scale Becomes a Competitive Weapon
Here's where things get interesting from a business strategy standpoint. Costco's sheer size gives it leverage that smaller competitors can only dream about. When you're moving merchandise by the shipping container load, suppliers listen. That bargaining power translates directly into lower costs, which Costco passes along to shoppers at the register.
This creates a virtuous cycle that's tough to break. Lower prices bring in more members. More members mean higher volume. Higher volume strengthens negotiating position with suppliers. Better deals from suppliers enable even lower prices. Round and round it goes, squeezing out competitors who can't match the value.
Looking ahead three decades - the same timeframe that created those millionaire-making returns - it's reasonable to expect Costco will still be packing parking lots and moving pallets. The business model has proven durable through multiple economic cycles, retail upheavals, and the rise of e-commerce. That kind of staying power is rare.
The Valuation Problem Nobody Wants to Talk About
Now for the uncomfortable truth. Even though Costco's stock price has dropped 14% from its recent peak, calling it cheap would be generous. The stock currently trades at a price-to-earnings ratio of 49.5. For context, that means investors are paying nearly 50 dollars for every dollar of annual profit the company generates.
That's expensive. Really expensive. For a retail operation, it's arguably too expensive, regardless of how well-run the business might be.
Smart money knows that valuation matters. A great company purchased at an inflated price can still deliver disappointing returns. The math is straightforward - when you overpay at the entrance, you're fighting an uphill battle from day one. For anyone buying Costco shares at today's prices, the odds of beating the broader market over the next five to ten years look slim.
The Maturity Factor Changes Everything
This is where expectations need a serious adjustment. Costco in 2026 bears little resemblance to Costco in 1996. Back then, the company had vast stretches of untapped territory. Opening new warehouses meant tapping into markets where nobody had experienced the Costco formula. Growth came fast and furious.
Today's Costco operates in a different reality. Major metropolitan areas already have multiple locations. The low-hanging fruit has been picked. Sure, there's still expansion potential - management's commitment to 30 new stores per year proves that - but the growth rate can't match what came before. It's simple mathematics. Adding 30 stores when you have 100 locations is transformative. Adding 30 when you already have 800 is incremental.
The best growth days are behind the company, not ahead of it. That's not a criticism - it's the natural lifecycle of successful businesses. But it fundamentally changes the investment thesis.
What This Means for Wealth Building
For someone hoping to replicate that 1996-to-2026 journey, hunting for the next millionaire-maker opportunity, Costco probably isn't the answer anymore. The company that could turn $6,000 into $1 million has evolved into a mature giant that will likely deliver solid, respectable returns - but not explosive, wealth-creating ones.
Does that make Costco a bad investment? Not necessarily. The company remains financially strong, competitively advantaged, and operationally excellent. For investors who value stability and predictability, Costco still offers plenty to like. The business isn't going anywhere. Revenue and earnings should continue growing, albeit at a more measured pace than previous decades.
The key is matching expectations to reality. Costco deserves a spot on any serious investor's watchlist. The quality is undeniable. But patience pays off. Waiting for a more reasonable entry price - a meaningful pullback from current levels - could make the difference between mediocre returns and satisfactory ones.
The Bigger Picture on Retail Investing
Costco's story illustrates a fundamental truth about investing: timing and valuation matter as much as business quality. Even wonderful companies can make poor investments if purchased at the wrong price. The reverse is also true - decent companies bought cheaply can deliver outsized gains.
The retail landscape continues evolving, with e-commerce pressures, changing consumer habits, and economic uncertainty creating constant challenges. Costco has navigated these waters better than most, maintaining relevance while others struggled or disappeared. That resilience has value, but it's already reflected in the stock price - and then some.
For investors scanning the market for opportunities, the lesson from Costco cuts both ways. Yes, this stock created millionaires over the past 30 years. But those returns came from getting in early, before the company reached its current scale, before everyone recognized its competitive advantages, before the stock price reflected all that potential.
Today's Costco investor is buying certainty and stability, not explosive growth potential. There's nothing wrong with that trade-off, as long as expectations align with reality. The company will likely continue serving shareholders well, generating steady returns that compound nicely over time.
Just don't expect another 16,810% gain over the next three decades. That ship has sailed, loaded with pallets of discount merchandise and headed off into the sunset.
