Costco (COST) Stock: Jim Cramer Recommends Buying as Institutional Ownership Climbs

TLDR

Table of Contents

Jim Cramer advised a Mad Money viewer to “buy some here” on Costco shares near $968, though he’d prefer seeing a modest pullback for better value
Motley Fool Asset Management expanded its Costco holdings by 20.8% during Q4, purchasing 10,429 additional shares to total 60,650
Several institutional funds expanded their Costco positions throughout Q4 and Q2, with institutions controlling 68.48% of outstanding shares
The warehouse retailer’s most recent quarter delivered $70.53B in revenue, surpassing forecasts, though earnings per share fell short by $0.01 at $4.93
Wall Street analysts assign an average “Moderate Buy” recommendation with a consensus price objective of $1,060.41, significantly higher than present trading levels

Costco (COST) shares began Wednesday’s session at $968.59, declining 0.6% intraday and remaining notably beneath the 52-week peak of $1,096.50.

Costco Wholesale Corporation, COST

During a recent Mad Money segment on CNBC, Jim Cramer responded to a viewer inquiry regarding the optimal timing for establishing a long-term stake. His advice was direct: purchase some shares now, while remaining hopeful for additional downside.

“I want value just like I want value at a store,” Cramer explained. He suggested the downside scenario involves the stock rallying directly to $1,025 with shareholders participating in the gains.

Cramer observed the shares currently command a 47x earnings multiple and recommended strategic patience, allowing the price to “come in a little” instead of deploying capital at a single level.

Institutional Accumulation Continues

As individual investors contemplate timing, institutional capital has been flowing into the stock. Motley Fool Asset Management expanded its stake by 20.8% throughout Q4, acquiring 10,429 shares to reach a total holding of 60,650, valued at approximately $52.3 million.

The asset manager wasn’t the only buyer. Brighton Jones increased its allocation by 12.3% during Q4. Revolve Wealth Partners grew its position by 13.1%. Additional funds elevated their holdings during Q2 as well. Collectively, institutional ownership now represents 68.48% of the company.

The stock’s 50-day moving average currently rests at $1,006.30, while the 200-day moving average stands at $965.46 — indicating shares are trading near their long-term technical support.

Quarterly Results and Dividend Increase

Costco disclosed quarterly results on May 28th. Revenue reached $70.53 billion, exceeding analyst projections of $70.12 billion. However, earnings per share of $4.93 fell one penny short of the $4.94 Wall Street consensus.

The retailer simultaneously announced a dividend increase from $1.30 to $1.47 per share quarterly, distributed on May 15th. The annualized dividend now totals $5.88, representing approximately a 0.6% yield.

E-commerce revenue surged more than 21% during the period, while gasoline volume reached all-time highs. Despite these operational highlights, shares declined roughly 5% following the announcement — suggesting the market prioritized valuation concerns over fundamental performance.

Costco also discreetly reduced prices across four Kirkland Signature items spanning food, household products, and sporting goods categories.

Wall Street sentiment remains predominantly bullish. Deutsche Bank elevated its price objective to $1,106 with a Buy recommendation. BTIG Research maintains a $1,125 target. Both Evercore and HC Wainwright continue advocating Buy ratings.

The consensus analyst price target reaches $1,060.41, supported by 22 Buy ratings, 11 Hold ratings, and a single Sell rating.

The stock trades at a PE ratio of 48.72, commanding a market capitalization of $429.55 billion. Analysts forecast full-year earnings per share of $20.38.

✨ Limited Time Offer