On Jan. 5, retail giant Costco Wholesale (NASDAQ:COST) released its monthly sales numbers. And for the month of December, the company's net sales totaled $23.8 billion, which were up 7% from a year ago. Its comparable sales growth rate was 5.5% for the total company and 6.2% in the U.S. – its largest market. That's an improvement from November's numbers when Costco's comparable company sales growth was a more modest 4.3%, and in the U.S. it was 6%.
Although that's not a huge improvement, it's a positive sign as the growth rate has been falling in recent months; in September, the comparable sales growth for the whole company was at 8.5%. And in the past, it has almost been the norm for Costco to generate double-digit growth. But with a recession potentially looming and inflation still a problem, Costco and other retailers have been facing some headwinds and a more hesitant consumer.
At a market ca of $200 billion, investors are paying a hefty multiple for shares of Costco as it trades at around 35 times earnings. That's a big ask at a time when consumers are being more conservative with growth stocks. And with a dividend yield of just 0.8%, Costco doesn't make for a particularly attractive income investment, either.
While it does provide safety and it will likely rise in value in the years ahead, as of right now, investors are better off going with more modestly priced stocks than Costco as the stock has been falling in recent months and more of a decline could be warranted.
