Sometimes the strongest businesses are the ones with a simple formula — loyal customers, recurring revenue and products people buy every week.
Today I’m watching Costco $Costco(COST)$ — a business built around something surprisingly powerful: getting customers to pay for the privilege of shopping there.
So what does Costco actually do?
Think about a typical Costco trip: groceries, petrol, electronics, appliances, clothing, furniture, pharmacy items and its famous food court. It sells a huge range of products through membership warehouses and its online business, using high sales volumes and rapid inventory turnover to keep prices competitive.
And that’s the interesting part of the business model.
Costco makes money from selling products AND membership fees. Customers pay to join, then have an incentive to keep coming back because they believe they are getting good value.
The latest numbers show the model is still working.
Fiscal 2026 net sales increased 10.1% to $297.2 billion, while fourth-quarter comparable sales rose 9.4%. Digital sales were even stronger, up 19.5% in the quarter.
September also brought another encouraging signal: U.S. comparable sales excluding fuel and FX rose 8%, while e-commerce jumped 19% year over year.
Why COST is my stock of the day:
🔹 Strong customer loyalty
🔹 Recurring membership revenue
🔹 Huge purchasing scale
🔹 Everyday products rather than speculative demand
🔹 Strong sales growth
🔹 E-commerce continues to expand
The biggest risk is valuation. Costco trades at a premium, so investors are already expecting a lot from the business.
But that’s what makes COST interesting to me.
While some parts of the market depend on the next big technology breakthrough, Costco’s growth is tied to something much simpler: customers continuing to shop, renew their memberships and come back for more.
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