1 Reason I Haven't Bought Costco Stock -- and Probably Never Will

Objectively speaking, I'm a huge fan of Costco Wholesale (NASDAQ: COST). The company offers high-quality products at low prices, and an annual membership fee that starts at $65 per year in the U.S. unlocks this value for Americans living in major metro areas.

Moreover, it has found success on four different continents, avoiding the cultural missteps that stymied peers like Walmart and Home Depot in attempted expansions outside of North America.

Despite these benefits, it is unlikely I will ever own the stock -- here's why.

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Why I will likely always avoid Costco stock

Valuation is the reason I will probably never buy Costco stock.

As of the time of this writing, its P/E ratio is about 54. That is higher than Walmart at 45 or Amazon, which currently sells at 28 times earnings. Although I might overlook that earnings multiple for a high-growth stock, unfortunately, that does not describe Costco.

In the first quarter of fiscal 2026 (ended Nov. 23, 2025), its $67 billion in total revenue grew by 8%, the same growth rate it reported in fiscal 2025. Likewise, net income of $2 billion increased by 11%, just above the 10% profit growth in fiscal 2025.

Although such growth could make it one of the best retail stocks to hold over the next 10 years, that is an extremely high valuation for a stock whose profit growth barely reaches double-digit percentage rates.

Additionally, Costco stock is unlikely to sell off without either internal missteps or a broad market sell-off. Costco has executed consistently over the years, meaning it has avoided critical mistakes that have hurt its competitors.

Furthermore, if a broad market sell-off occurs, Costco will probably become somewhat cheaper, but other stocks I might buy will also likely fall in value under such circumstances.

Investors may have to wait a long time for a "low" valuation. The company's P/E ratio has not fallen below 30 since 2019, and the last time the earnings multiple dipped below 20 was in 2010. Thus, even if a downturn occurs, Costco is unlikely to become the most attractive retail stock.

Costco is off my buy list

Due to its valuation, Costco is a high-quality stock that I am unlikely to ever buy.

Of its brick-and-mortar retail cohort, Costco is arguably the most successful when factoring in international performance. Unfortunately, its track record of success is also well understood among investors, and that has led to a situation where a moderate growth company attracts a premium valuation.

Hence, while its longest-term investors should probably stay in its stock, new investors should find other stocks trading at fairer valuations.

Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Costco Wholesale, Home Depot, and Walmart. The Motley Fool has a disclosure policy.