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Costco (Nasdaq; ticker: COST) is one of the most popular membership-only warehouse chains worldwide. Often referred to as a ‘membership warehouse club’, the company is recognised for its high-quality, low-priced items.
Costco's history can be traced back to 1976 with the founding of the ‘Price Club’ in San Diego, California. This membership-only warehouse club concept was initially limited to businesses but ultimately laid the foundation for the company.
After announcing the Costco name and stock symbol in 1997 and opening it to businesses and the public, Costco is currently the 22nd most valuable company globally (US$442 billion in market capitalisation), with an estimated workforce of more than 300,000 people.
Outlets can be found in the US, Canada, Mexico, Japan, the United Kingdom, South Korea, Australia, Taiwan, and many more countries. Among other products, the company’s core sales include ‘Hot Buys’, ‘TV, Electronics and Security’, ‘Furniture and Mattresses’, ‘Home and Kitchen’, ‘Clothing’, ‘Babywear’, and ‘Grocery and Household’.
As a leveraged financial derivative product, CFDs (Contracts for Differences) are a unique, low-cost approach to speculating and hedging across the global financial markets. CFDs allow investors to trade based on the underlying price movement of various asset classes without taking direct ownership, including individual shares, such as Costco. Therefore, given the derivative nature of CFDs, all trades are settled in cash by taking the difference between a CFD's opening and closing prices.
Margin trading in the CFD market is a defining feature. To help explain how leverage works, consider this simplified example. Two investors want to buy 100 shares of company ABC, trading at US$50 per share. The first investor purchases the shares outright, costing US$5,000; the second investor, however, invests in an equivalent position size using CFDs with FP Markets, which usually have a 20% margin requirement. This means the CFD investor trades an equivalent position for US$1,000, using leverage of 5:1.
1. Open an FP Markets Forex and CFD Trading Account
To start investing with Share CFDs, the first step involves opening a Forex and CFD trading account with FP Markets. Visit the main webpage, click the ‘OPEN LIVE’ tab at the upper right corner, and complete the Account Application.
2. Download your Trading Platform
Upon successfully registering your trading account, use the login credentials sent to your registered email ID to access the FP Markets Client Portal.
Select 'Platforms' from the menu on the left and choose your preferred trading platform. MetaTrader 5 (MT5) or cTrader are popular platforms for Share CFD investors.
3. Find the COST Ticker
From MT5’s Market Watch tab (Ctrl+M), type ‘COST’ at the bottom and select the Costco Stock to create a new row (see the first image below). Following this, drag and drop the Stock to the chart’s interface and alter the properties (F8) to suit your trading approach (see the second image below).
4. Place the Buy or Sell Order
With MT5, most investors use the order window to place buy and sell orders (F9). As you can see from the first image below, before clicking the buy or sell button, the order window permits investors to enter several trading parameters, such as order types, trading volume and stop-loss orders.
Some shorter-term traders employ the one-click trading feature (see the second image below). While this enables traders to enter the market with ‘one-click’, providing trading volume is set, it lacks the risk management option. Once the trade is active, traders must open the trading terminal (Ctrl+T) to add additional trading parameters.
Share CFDs:
According to the company's earnings report (released 12 December 2024) for the first quarter of fiscal year 2025, revenue increased 7.5% YY (year over year) to US$62.2 billion, representing a beat on forecasts of US$62.08 billion. The company’s Earnings Per Share (EPS) of US$4.04 also surpassed analysts’ estimates of US$3.79 and increased from the previous EPS of US$3.58 YY. Additionally, net income advanced to US$1.8 billion from US$1.6 billion YY.
With inflation still somewhat elevated in the US and expected to remain stubborn in 2025, consumers continue to seek bulk items at better value, particularly in the US. Costco’s worldwide membership fee revenue rose by nearly 8.0% YY to US$1.17 billion, versus US$1.16 billion analysts had expected.
Costco’s share price has so far had a remarkable 2024, up 50% year to date, with analysts projecting further outperformance. According to Refinitiv data (see the stacked bar graph below), projections show that 64% of analysts are bullish on the COST Stock at current levels, while 36% recommend a hold. The Stock's current mean (median) price target is US$1,012 (US$1,030).
From a technical perspective, the daily chart of COST formed a rising wedge between US$702 and US$896 that began in April 2024. This suggested that although the Stock’s share price was rallying, it did so at a slower pace. However, price broke above the upper boundary of the pattern on 22 November and subsequently retested the breached boundary as support, indicating bullish intent. Following the all-time high of US$1,007, the Stock has recently retested the upper boundary, which is holding for now. Technically, alongside the clear uptrend and bullish forecasts above, this suggests the COST Stock remains a buyers’ market, and any dips will likely be bought into.
One of the ways in which a company raises capital to fund growth and fulfil other obligations is by selling shares of the company to investors. In return for purchasing shares, assuming the company performs well and the share price rises, this can increase investors’ investment value. Further, an investor may also receive dividend payments (a portion of the company’s profits that are distributed to shareholders) and, on most occasions, have the right to vote at the company’s annual meeting.
Another widely used method of investing in Stocks is through futures and options, which are financial derivatives that function similarly to CFDs.
With futures contracts, buyers and sellers agree to buy and sell the underlying asset at a predefined price on a future date (expiration date). Key characteristics of a futures contract include obligation – both parties are obligated to fulfil their side of the contract – as well as leverage, allowing investors to take larger positions with a smaller initial investment value.
An options contract gives the buyer the right but not the obligation to buy or sell the underlying asset at the strike price (predefined price) at or before the expiration date. The seller, however, is obligated to buy or sell should the buyer exercise their right to trade (to accept this commitment, the seller is paid an upfront premium).
While single-Stock ETFs are available, passively managed ETFs are more popular and are often recommended for beginner investors. A passive ETF is a fund that trades on a Stock exchange like a common Stock and tracks the performance of a market index.
Why a Stock investor may opt for ETFs can vary from its diversification benefits, ease of buying and selling, low costs, as well as tax efficiency for some investors. It is important to recognise that although you may invest in an ETF with exposure to COST, it will not perfectly mirror the price movements of this Stock.
1. Does COST pay a dividend?
Costco does pay a dividend. As of writing, the company’s annual dividend yield is 0.46%.
2. What are the major differences between CFDs and physical shares?
Ownership is a key differentiating point between CFDs and physical shares; the former does not permit ownership of the underlying asset as all trades are settled in cash, and investors essentially trade based on the price movement, nothing else. Nevertheless, the latter entitles investors to partial ownership of the company, including voting rights.
Leverage is another defining characteristic that separates CFDs and physical shares. Investors typically purchase physical shares with a cash account (no leverage), while CFD investors often use leverage. Physical shares are also traded on a Stock exchange; CFDs, on the other hand, are traded in the Over-the-Counter market (OTC).
3. Can I trade the COST Stock on MT5?
With FP Markets, the COST Stock can be traded on MT5 and cTrader.
4. What are the trading hours for COST?
The trading hours for COST are between 16:30 and 23:00 GMT+2 (Monday-Friday).
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