Costco Wholesale Corp. engages in the operation of membership-only warehouses. With over 800 warehouses worldwide, Costco offers a variety of products and services ranging from groceries and electronics to travel and insurance. The company has a loyal customer base and has consistently been ranked among the top retailers in terms of customer satisfaction. In fact, the company's membership model provides a unique competitive advantage, as it creates a loyal customer base that is more likely to continue shopping at Costco even as other retailers move online. At the end of its 4th quarter 2022, Costco's membership renewal rate runs at 92.6% in the US and Canada. 

Costco has consistently demonstrated strong financial performance, with revenue and net income growing steadily over the past several years. In its most recent fiscal year, Costco reported revenue of $166.8 billion, an increase of 9.2% over the previous year, and net income of $4.0 billion, an increase of 17.6% over the previous year. The company's return on equity (ROE) and return on assets (ROA) are also strong, at 24.8% and 7.5%, respectively. The majority of Costco's earnings power comes from recurring membership revenues. This type of forecast-able, recurring revenue theme is favored during periods of economic uncertainty, and that's also why Costco is trading at a rich valuation multiple. 

We have a 2024 price target of $799.5/share for Costco, by applying a 50x multiple to 2024's estimated earnings of $15.99/share.