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This Month's Featured News The Best Holiday Present You Can Give Yourself? Costco StockAuthored by Thomas Hughes. Article Posted: 12/12/2025. 
Summary- Costco had a solid quarter and showed momentum in its Q1 FY2026 results, providing investors with reasons to be optimistic.
- Cash flow is positive, the cash pile is building, and a special dividend payment is on the horizon.
- Analysts lifted price targets and pointed to a solid double-digit upside and new all-time highs.
Costco (NASDAQ: COST) is an attractive buy-and-hold stock for 2026, with industry-leading growth and solid margins despite macroeconomic headwinds and shifting consumer habits. It's also a sensible late addition to 2026 portfolios, trading near a strong support level in mid-December — limiting downside risk while catalysts remain in place. The catalysts include a strong Q1 for fiscal year 2026 (FY2026) and a healthy long-term growth outlook driven by international expansion and a growing cash position. Elon Musk's Starlink project is generating major speculation ahead of a potential IPO that some analysts believe could reach a historic $100 billion valuation. According to James Altucher, there may be a smart "backdoor" way for everyday investors to position ahead of that event without needing traditional IPO access — and he says it can be done for under $100. He's also sharing a free ticker tied to this trend for anyone who wants to take a closer look. Click here to learn more Costco's cash balance at the end of Q1 was over $16.2 billion. Up nearly 15% year-over-year, this balance supports the company's financial health. Cash flow should remain positive, and capital returns are likely. Costco does not aggressively repurchase shares nor pay a particularly large regular dividend, but its tendency to accumulate cash has typically led to special dividends every few years that are attractive to investors. The most recent special dividend, paid in December 2023, was $15 per share (about 1.65% relative to mid-December prices). At the time, the cash balance was just over $17 billion. The takeaway: Costco remains positioned to issue another special dividend at any time. Costco Has Strong Quarter, Reduces Store Count Target for 2026Costco reported a strong Q1, with revenue up 8.2% to $67.31 billion — beating MarketBeat's consensus by 280 basis points. Comparable sales rose 6.4% across the network, driven by a 3.2% increase in average ticket and a 3.1% increase in traffic. By segment, U.S. comps rose 5.9%; Other International increased 6.8% and Canada gained 9%. Digital, an important growth channel, grew 20.5%, while fees — a forward indicator of membership strength — increased 14%. Margin trends were favorable. Gross margin widened and SG&A expenses improved slightly, contributing to accelerated earnings growth. Operating income increased by 12.15%, while net income and GAAP earnings rose 11.3%. The company does not provide formal guidance, but the higher store count, comparable-sales momentum, and gains in membership point to continued strength into the current and coming quarters. Costco's performance and cash flow produced higher cash on the balance sheet, added inventory to support new stores, and increased total assets that offset rising liabilities. The net result was roughly a 3.8% improvement in shareholders' equity, along with ongoing share repurchases and the regular dividend. Share repurchases and the dividend are not aggressive but are consistent, helping to enhance shareholder value and build broad market support. The 0.6% annualized dividend yield is modest relative to earnings, while buybacks represent a smaller but incremental reduction in share count, including in FQ1. Analysts Point to a Rebound in Costco Share PricesAnalysts noted some concerns, but only one firm cut its price target, consistent with the broader consensus. Overall, analyst targets imply roughly 15% upside for COST, and most target revisions were bullish. On balance, analysts raised targets after the results, pushing consensus into the $1,100–$1,200 range and, in some cases, projecting longer-term upside to around $1,400 — roughly 25% higher and a potential new all-time high at the low-end target. A move to new highs would be meaningful: Costco's price action has been range-bound and consolidating for over a year, and a breakout would open more aggressive upside targets. The base-case upside equates to about $100, putting the stock near approximately $1,185 relative to a key resistance point. The bull case envisions a sustained uptrend that could double that base-case gain over time. 
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