| By Andy Swan If you want a master class at providing value to consumers, look no further than Costco (COST). The bulk retailer is famous for its enduring $1.50 hotdog combo and treasure-hunt-inspired store format… and for investors, its seemingly ever-rising stock. Shares have rallied more than 50% in 2024. 
Source: TradingView Costco has had a phenomenal year, no doubt about that. Zoom out five years, and it’s logged long-term investors an incredible +234%. But how can it maintain this robust growth into 2025? We’ve pinpointed three major growth drivers that could keep COST soaring… No. 1: E-Commerce Costco is nailing its online strategy – e-commerce has become a major growth driver for the company in 2024, delivering 13% comparable sales growth in the most recent quarter. 
When it comes to digital traffic in the here and now, LikeFolio data shows a significant jump from peak-holiday shopping in 2023: 
Costco has also grown its significantly larger share of web traffic data over its primary competitors Sam's Club (WMT) and BJ's Wholesale (BJ), from 63% to 66% over the past quarter: 
(Better yet? In-person shoppers spend more time in Costco as well, with an average dwell time of 37 minutes, compared to Walmart's 31 minutes and Target's 28 minutes.) No. 2: Premier Memberships Another huge tailwind working in Costco’s favor is growth in its premier membership. In early September, Costco increased annual membership prices from $60 to $65 and $120 to $130 for its Gold Star and Executive memberships, respectively – the first time Costco membership prices have increased in over seven years. You might think these cost increases would damage consumer sentiment. But our data reflects the opposite. Costco’s Consumer Happiness levels sit at a solid 70%, which is an improvement of four percentage points over the past quarter. This strong sentiment is also evident in Costco's membership retention rate of over 90%. Costco can command a steep price for its membership because its savings are undeniable. Consider this: ✓ A Costco Executive membership costs $130 a year and offers 2% cash back. ✓ The average monthly grocery bill in the U.S. is $334 for a family of one and $667 for a family of four. If the family of one buys groceries from Costco alone, it would offset that membership cost by $80. A family of four would make a $30 profit. And this is solely on purchasing groceries. We’re also not detecting any significant churn since its price hikes. Consumer interest in its executive membership tier (which comes at a heftier price tag) shows consistent expansion, while cancellation searches remain flat: 
Source: Google Trends No. 3: A Laser Focus on Inventory If those powerful growth drivers weren’t enough, the company has secured a serious advantage over its competitors with its laser focus on inventory. By focusing on a limited selection of items, Costco not only ensures high sales volumes but also fast inventory turnover. The company employs cross-docking and single-step distribution channels to efficiently move merchandise from manufacturers to warehouses, reducing inventory management costs. Costco’s core strategy revolves around offering its members high-quality goods and services at the lowest possible prices: coffee from Starbucks (SBUX), or jellybeans from Jelly Belly. It does this by maintaining a cost leadership strategy while focusing on selling a limited selection of products in bulk. Its Kirkland Signature brand accounts for approximately 23% of Costco’s overall sales. Execs have touted focusing on quality, not quantity, so customers are limited to about 550 Kirkland Signature items. Kirkland is priced competitively and can be even better quality than brand names. The Bottom Line Costco has had all around success with continued top-line growth, solid consumer sentiment, a well-loved exclusive brand, and a strong global presence. Look for continued outperformance in e-commerce and premium membership growth to boost the stock in the long-run. This is one stock every investor should be looking at for 2025. Until next time,  Andy Swan
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