Oppenheimer Remains Positive on Costco (COST), Names it a ‘Top Pick’

Costco Wholesale Corporation (NASDAQ:COST) is one of the best dividend stocks to buy. On November 6, Costco announced a comparable sales growth in October of 6.7%, up from 5.7% the prior month. Sales gained momentum despite a 100-basis-point impact linked to last year’s early purchases ahead of Hurricane Helene and port strikes on the East Coast.

Separately, Oppenheimer named Costco as a 'Top Pick' on November 3, crediting the retailer's compelling valuation, robust market standing, and staying power in a softer spending season.Oppenheimer Remains Positive on Costco (COST), Names it a 'Top Pick'

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Rupesh Parikh, an Oppenheimer analyst, wrote in an investor note that after the stock’s recent re-rating and with the toughest comps nearly behind it, the firm is adding COST to its top picks again.

Although the stock has dropped about 15% from its February peak, the analyst remarked that the decline further supports the outperformance outlook, driven by Costco’s solid value offering and wealthier customer segment.

The firm trimmed its price target to $1,050 from $1,130, which indicates the re-rating but still includes nearly 15% upside.

According to Oppenheimer, Costco’s valuation has returned to normal levels, with its earnings multiple close to historical averages. Parikh noted that the company is set up nicely for the holiday season due to solid retail activity and a strong product lineup, including Apple products, gift cards, branded apparel, and appliances.

There are potential long-term growth triggers like a stock split or special dividend, but management has not signaled anything on these. In the short term, Oppenheimer recommended that any swings caused by potential food stamp issues during a government shutdown could be leveraged.

While we acknowledge the potential of COST as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure. None.

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