Costco (NASDAQ: COST) is one of those rare businesses that does an excellent job satisfying all its stakeholders. Shoppers love its treasure-hunting atmosphere and low prices, employees stick around for far longer than the industry average, and the chain's investors have been rewarded for patiently holding the stock. Costco shares have returned more than 15% per year for nearly 40 years, in fact, enough to create many millionaires since its 1985 initial public offering.

Investing is all about the future, though, and there are limits to Costco's growth potential from here. Shares are trading near a record high valuation, and so it's reasonable to wonder whether you'll get good returns from buying the stock right now. Despite those challenges, Costco stock should be a good addition to most investors' portfolios. Here's why.

The foundation of any retailer's strength is the level of engagement it can keep with its core shoppers. With inflation soaring, this past year has tested Costco along with all of its peers on this point, and the warehouse retailing giant has aced that test. Comparable-store sales growth remained steady in 2023 and accelerated to an 8% increase in early 2024.

Continue reading

Source Fool.com