JP Morgan has upped its Costco Wholesale (NASDAQ:) price target to $502 from $475, while keeping its overweight rating.

JP Morgan was one of many investment companies that increased its Costco price target following the fourth quarter earnings report. This beat all expectations. From $52.28billion last year, net sales increased 17.5 per cent to $61.44 billion. Additionally, net sales for the fiscal year rose 17.7 per cent to $192.05billion from $163.22billion last year.

Sales were comparable across all regions except Canada where they rose nearly 20 percent.

The average analyst doesn’t think Costco shares will be as popular as JP Morgan over the next 12 months. In the past three months, the average target price for the Wall Street analysts monitoring the stock was $479.47. The high forecast is $525.00 while the low forecast is $385.00. Costco’s average price target is $479.47, which represents 2.51% more than the previous price of $467.75.

Costco stock has a problem: its valuation. It is currently trading at nearly twice the P/E for the stock’s next six months earnings.

Supply chain problems could also limit short-term sales growth. Company has already set purchase caps on certain goods that are scarce.

I’m bullish about this stock. (See Costco stock charts on TipRanks)

Costco: Good Company and Good Investment

Costco is a good company and a good investment. The company is well-known among customers who are willing to pay membership fees in order to have the opportunity of shopping at Costco stores. This company has been ranked high in several highly-publicized company lists. It beat Amazon (NASDAQ 🙂 in 2018, and is now ranked number one on the American Customer Satisfaction.

Costco makes a great investment as it delivers superior returns for its shareholders. Over the last ten years, Costco has delivered an average annual total return of 21.54 percent, compared to the 16.57 percent for the S&P 500.

Plenty of Room for Long-term Growth

Costco is the 3rd largest global retailer and the 12th largest Fortune 500 company, with a market capitalization of $206.78 billion. The company currently has 817 warehouses. These include 565 in the United States, Puerto Rico and 39 in Mexico. It also operates 105 in Canada and 29 in Japan. It also has e-commerce websites in Australia, Canada, Mexico, Korea and Taiwan.

Costco’s stores are a fraction than the number Walmart (NYSE) has. Costco therefore has plenty to grow. China is the only country where Costco operates a single store. Customers have been flooding the shop in search of bargains.

Although it is uncertain whether Costco can achieve JP Morgan’s bullish target, there are some things that are certain: Costco still has plenty to grow and will deliver better returns for long-term investors.

Disclosure: Panos Mourdoukoutas held a Costco position at the time this article was published.

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