Is Costco Stock Too Expensive Now?

You may think that, since Costco Wholesale (NASDAQ: COST) shares are up only 4% year to date, they shouldn't be considered overly expensive. Yet compared to its main competitors, including Walmart, Costco commands a valuation premium that might be worth paying only if you're a certain type of investor. Investors have been paying a premium for Costco stock for a while now, and it has been more than justified, as it has consistently delivered for its shareholders. Even though Costco's stock is nearly $200 off its 52-week high of $1,096.50, the wholesale club's valuation is lofty because its membership model gives it a high-margin recurring revenue stream. The company's member retention also remains well above 90% year over year.