Will You Be Comfortable Buying Costco Wholesale Stock?
History of recovery post-dips is not on your side and there is fundamental risk – specific to profitability. Consider the following data:
- Size: A $407 Bil company with $269 Bil in revenue currently trading at $915.95.
- Fundamentals: Last 12 month revenue growth of 5.9% and operating margin of 3.8%.
- Liquidity: Has Debt to Equity ratio of 0.02 and Cash to Assets ratio of 0.2
- Valuation: Currently trading at P/E multiple of 51.8 and P/EBIT multiple of 38.4
- Has one instance since 2010 where it dipped >30% in < 30 days and subsequently returned 17.3% within a year. See COST Dip Buy Analysis.
While we like to buy dips if the fundamentals check out – for COST, see Buy or Sell COST Stock – we are wary of falling knives. Specifically, it is worth trying to answer if things get really bad, and COST drops another 20-30% to $641 levels, will we be able to hold on to the stock? What is the worst case scenario? We call it downturn resilience.
Below is a deep dive into Costco Wholesale (COST) downturn resilience – specifically, its performance vs the market during past crises? Turns out, the stock has been more resilient than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
Below are the details, but before that, as a quick background: COST operates membership warehouses worldwide, offering groceries, sundries, liquor, deli products, and services like pharmacies, opticals, food courts, hearing aids, and tire installations.
- Costco Wholesale Stock Hands $31 Bil Back – Worth a Look?
- Now Is Not The Time To Buy Costco Wholesale Stock
- How Does COST Stack Up Against Its Peers?
- S&P 500 Movers | Winners: EA, PCAR, CDW | Losers: COST, ORCL, EBAY
- What’s Next For Costco Stock?
- How Will Costco’s Stock React To Its Upcoming Earnings?
2022 Inflation Shock
- COST stock fell 31.5% from a high of $608.05 on 7 April 2022 to $416.43 on 20 May 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 7 December 2023
- Since then, the stock increased to a high of $1,076.86 on 13 February 2025 , and currently trades at $915.95
| COST | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -31.5% | -25.4% |
| Time to Full Recovery | 566 days | 464 days |
2020 Covid Pandemic
- COST stock fell 13.6% from a high of $324.08 on 20 February 2020 to $279.85 on 12 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 9 July 2020
| COST | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -13.6% | -33.9% |
| Time to Full Recovery | 119 days | 148 days |
2018 Correction
- COST stock fell 22.2% from a high of $244.21 on 11 September 2018 to $189.99 on 24 December 2018 vs. a peak-to-trough decline of 19.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 4 April 2019
| COST | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -22.2% | -19.8% |
| Time to Full Recovery | 101 days | 120 days |
2008 Global Financial Crisis
- COST stock fell 48.5% from a high of $74.66 on 8 July 2008 to $38.44 on 9 March 2009 vs. a peak-to-trough decline of 56.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 8 February 2011
| COST | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -48.5% | -56.8% |
| Time to Full Recovery | 701 days | 1480 days |
Worried that COST could fall much more? You could take a look at the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.