Here are the next drivers of Costco growth after a great quarter and a stock near records

Costco is implementing several growth strategies to enhance its stock value even after significant year-to-date gains. These strategies include:

1. E-commerce Expansion: Costco is focusing on growing its e-commerce business, as evidenced by the 20.7% year-over-year increase in online sales in the fiscal Q3. The company plans to invest in technology and alternative revenue streams, including digital advertising, to monetize online traffic similar to Amazon and Walmart.

2. Warehouse Store Expansion: Costco is expanding its warehouse stores in both the U.S. and international markets. Management plans to open 12 new locations in the remainder of fiscal year 2024, with a long-term goal of opening between 25 to 30 new warehouses per year.

3. Membership Fee Increase: Costco is expected to increase its membership fees, which is seen as a major catalyst for the stock. Although there was no update on the potential fee increase in the recent earnings report, it is still considered to be a matter of time before it happens.

4. Strengthening Existing Warehouses: Costco is working on improving its existing warehouses to drive growth. Redburn noted that the strength of existing warehouses is "the main driver of membership growth."

5. International Market Expansion: Costco sees significant potential in expanding its presence in international markets, such as China. The company believes that new warehouse growth internationally can lead to increased market penetration2.

These growth strategies are expected to help Costco continue its strong performance and boost its stock value even further.

In 2024, Costco's stock performance was significantly better than both the S&P 500 and the consumer staples sector. Costco's shares gained 20% during the year, which was more than double the S&P 500's advance and well above the 6% increase in the consumer staples sector over the same period.