Costco vs. S&P 500: Who's the Winner in long run?

I know many of us have been Costco members for years, just like me. We've enjoyed the convenience, the quality, and the incredible deals. But have you ever stopped to think about what could have been? Imagine if, when we first signed up for our memberships, we had also invested in Costco stock.

Based on my research, as of 8/22/2024; the returns could have been astounding. Costco's stock has soared by a whopping 646% over the past decade, while the SPY ETF, a popular benchmark, has only gained 188%. That's a significant difference that could have made a real impact on our financial futures.

Source: Yahoo Finance (Costco vs SPY for last 10 years)

But that's not all. If we look even further back, the numbers become even more staggering. Over the past 20 years, Costco's stock has returned a mind-blowing 20.5 times your initial investment. That’s compared to just 4 times for SPY. Ofcourse keeping dividends out of the picture in this research, but still its huge difference in terms of overall returns.

        Source: Yahoo Finance (Costco vs SPY for last 20 years)

Why has Costco performed so well? In my view, several factors contribute to its success:

• Strong business model: Costco's membership-based model provides a steady stream of revenue and encourages customer loyalty.

• Efficient operations: The company's focus on bulk purchases and low overhead costs allows it to offer competitive prices.

• Diversified revenue streams: Costco's operations extend beyond retail, including gasoline stations, pharmacies, and food courts, providing additional revenue streams.

• Effective management: Costco's leadership has demonstrated a consistent ability to navigate challenges and capitalize on opportunities.

• Customer loyality: Very strong customer satisfication, courtesous employees, amazing return policy

  
  

Inspired by Costco's impressive performance, I've decided to begin systematically investing in the company. As a long-time member since 2007, I'm confident in its potential for continued growth.

Let me know in comment section your experience with Costco as a wholesale retailer or as a investment.