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Is Costco Wholesale Corporation (COST) the Best Quality Stock to Invest in Now?

We recently published a list of 12 Best Quality Stocks to Invest in Now. In this article, we are going to take a look at where Costco Wholesale Corporation (NASDAQ:COST) stands against other best quality stocks to invest in now.

Tom Lee, co-founder of Fundstrat Global Advisors, believes that a significant rebound is in the offing, despite the tough start to the year. The strategist opines that there is a possibility of ~10% – 15% bounce over the coming months. In an interview with CNBC, he stated his expectations about March, April, and May witnessing the rally. Therefore, missing critical trading days can be a mistake for investors.

What Lies Ahead?

Lee believes that investors can consider buying as the markets are unsettled. In an interview with CNBC, he went on to explain that the market’s 10 best days last year resulted in the addition of up to 20 percentage points for the broader S&P 500. However, if we exclude these 10 days, the index increased by only 4%. According to him, the best days might be around the corner. If there are tensions related to the growth or related to the employment market, Trump or the US Fed can intervene to bring some stability. These are the favourable catalysts for the upcoming weeks, says Lee. Overall, he believes that a large chunk of the bad news has been priced in as markets have seen a significant decline.

READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.

Signs of Economic Strength Remain

Morningstar, while echoing the views of Adam Hetts (Janus Henderson Investors portfolio manager), mentioned that the longer-term perspective is expected to provide investors a silver lining. Hetts believes that there are bright spots in the international markets such as Europe and China, that have surpassed the performance of the US stocks since the beginning of the year. Even though the mega-cap tech stocks have been declining, they are getting cheaper as compared with the elevated valuations just a few months ago.

According to experts, there are several signs of economic strength. Gus Faucher, chief economist for PNC Financial Services Group, told Morningstar that consumers continue to spend amidst weakness in the sentiment data. Also, the labor market has been holding up. Overall, the chief economist doesn’t see any sort of fundamental weaknesses in the broader economy that can signal a problem. As per Morningstar chief US market strategist David Sekera, the investors are required to focus on the fundamentals and valuations, while maintaining a long-term view.

Our Methodology

To list the 12 Best Quality Stocks to Invest in Now, we sifted through the holdings of iShares MSCI USA Quality Factor ETF. Next, we chose the stocks that are popular among hedge funds. Finally, the stocks were arranged in ascending order of their hedge fund sentiment, as of Q4 2024.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Costco Wholesale Corporation (NASDAQ:COST)

Number of Hedge Fund Holders: 96

Costco Wholesale Corporation (NASDAQ:COST) is engaged in the operation of membership warehouses. Bank of America Securities analyst Robert Ohmes reiterated a “Buy” rating on the company’s stock, setting a price objective of $1,095.00. The analyst rating is backed by factors highlighting the company’s strong performance and strategic positioning. Costco Wholesale Corporation (NASDAQ:COST) reported healthy financial results for Q2 2025, with EPS exceeding expectations despite the foreign exchange challenges, says the analyst.

Costco Wholesale Corporation (NASDAQ:COST)’s e-commerce segment demonstrated strong expansion, and the company managed to improve its gross margin. In Q2 2025, the company saw e-commerce comparable sales growth of 20.9%. Its gross m

A customer in a warehouse aisles, browsing the wide range of branded and private-label products.

argin came in at 10.85%, reflecting an increase of 5 bps YoY. As per the analyst, the positive membership trends further aid the favourable outlook on the Costco Wholesale Corporation (NASDAQ:COST)’s stock. Collectively, all these factors, together with the company’s ability to attract consumers amidst the high-price environment and its strategic investments towards supply chain and wages, place it well for continued growth. The company’s investments in digital initiatives offer strong opportunities for future growth. Given its progress in enhancing the e-commerce platform, online profitability as well as expansion of digital offerings, the company remains well-placed to capture a significant share of the growing online retail market.

Madison Investments, an investment advisor, released its Q3 2024 investor letter. Here is what the fund said:

“Costco Wholesale Corporation (NASDAQ:COST) continues to demonstrate its commitment to sustainability by lowering its emissions. For example, it has converted its Kirkland Signature laundry packs from plastic tubs to a pouch. This has reduced plastic packaging by 80%. It has also moved to localize production of bulky items such as water, paper, and laundry detergents. Manufacturing these goods closer to the countries in which they are sold reduces emissions associated with shipping.”

Overall, COST ranks 12th on our list of best quality stocks to invest in now. While we acknowledge the potential of COST as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than COST but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires

Disclosure: None. This article is originally published at Insider Monkey.

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