Was Jim Cramer Right About Costco Wholesale Corporation (COST)?

We recently published a list of Was Jim Cramer Right About These 23 Stocks? In this article, we are going to take a look at where Costco Wholesale Corporation (NASDAQ:COST) stands against other stocks that Jim Cramer discussed 12 months ago.

In the most recent Mad Money episode, Jim Cramer shared his thoughts on the current state of the market, especially about AI stocks. He noted that despite the enthusiasm surrounding AI, investors are no longer willing to pay high prices for stocks tied to this technology. Cramer explained that on days like Tuesday, people in the market are feeling what he referred to as “painful shrinkage.”

“In this business, shrinkage means paying less for the same earnings that you were willing to pay up for only just a week or two ago.”

READ ALSO: Jim Cramer’s Thoughts on These 5 Stocks and Was Jim Cramer Right About These 23 Stocks?

He pointed out that this phenomenon is commonly known as price-to-earnings multiple compression, a widespread trend across the market. Cramer asked why this is happening, especially when it seems like nothing has changed with the companies themselves. He explained:

“Look, when everyone’s terrified that a piano’s about to fall on their heads, they don’t want to get hit by the baby grand and right now they don’t want to own the falling stocks either. So they sell but they can’t get a good price anymore because too many people want out for the same reasons. They think that stocks are overpriced versus when we consider what could lay ahead.”

Cramer further elaborated that there is a strong sense of apprehension in the market right now, with investors bracing for potential economic challenges. Despite good news that may come out about companies or the economy, people are reluctant to hold onto stocks because they are anticipating weakness down the road.

He said that even though they cannot see it clearly, the ongoing concerns about the economy and the administration’s messaging about necessary economic adjustments create a climate of fear. As Cramer put it, “If the administration keeps talking about how we’re transitioning, how the economy needs to make some painful adjustments, then any big rally that we had Friday and yesterday will become magnets for sellers.”

“Here’s the bottom line: This latest round of multiple compression came on a day of wonderment about artificial intelligence, and even with Jensen’s fabulous speech, multiple compression was just much more powerful. You know what? It’s going to stay that way until we get through this environment, either because the White House backs off, or because stocks come down to the point where we simply get used to it.”

Methodology

For this article, we compiled a list of 23 stocks that were discussed by Jim Cramer during the episode of Mad Money on March 26, 2024. We then calculated their performance from March 26th, 2024, market close to March 18th, 2025, market close. We have also included the hedge fund sentiment for the stocks, which we sourced from Insider Monkey’s Q4 2024 database of over 900 hedge funds. The stocks are listed in the order that Cramer mentioned them.

Please note that this article mentions Jim Cramer’s previous opinions and may not account for any changes to his opinions regarding the stocks that are mentioned. It is primarily an examination of how his previously provided opinions have panned out.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

 Costco Wholesale Corporation (NASDAQ:COST)

Number of Hedge Fund Holders: 96

Costco Wholesale Corporation (NASDAQ:COST) is a leading membership-based warehouse club, known for its bulk goods and strong customer loyalty. Cramer pointed to Costco as another retailer thriving despite macro headwinds at the time.

“Costco is delivering insane numbers at a time when everyone’s supposed to be so cash strapped. They have the lowest prices and they’re doing a gigantic amount of business per store.”

Costco Wholesale Corporation (NASDAQ:COST) has gained 23.12% since it was highlighted in that episode.

Jim Cramer remains bullish. As of his latest comments on the 14^th of March, he believes that Costco Wholesale Corporation (NASDAQ:COST) remains a very good business to buy, and that the recent dip was unjustified:

“Right now, the stock’s in free fall. Now why is that? Because these knucklehead analysts felt it was a bad quarter. They didn’t know how to read the, they didn’t know how to read the income statement and they certainly didn’t know how to listen to the conference call. This stock is now, when it’s a stock that’s in free fall, we’re going to let, what I like to do is tell people, wait, it’s going to tell you what to do… We’re going to wait till it settles and when it settles, we’re going to buy. But we just don’t know what level it’s going to settle. That’s what we do. It’s called patience.”

Overall, COST ranks 4th on our list of stocks that Jim Cramer discussed 12 months ago. While we acknowledge the potential of COST as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than COST but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires

Disclosure: None. This article is originally published at Insider Monkey.