The Costco (NASDAQ:COST) hot dog stand is one of the last great bastions of inexpensive cuisine anywhere in the United States. You can still get a hot dog and a soda for $1.50, which you’ve been able to do so since 1995. And you’ll continue to be able to do it for some time to come under Gary Millerchip, the retailer’s new CFO. Investors, however, weren’t enthused, and Costco is down nearly 2.5% in Friday afternoon’s trading.
Millerchip made it clear in an interview with CNN that the $1.50 hot dog and soda combo, which has been around for longer than some people have been alive, is not going anywhere. At least, not for now. Millerchip specifically confirmed that “…the $1.50 hot dog price is safe.” Former Costco CFO Richard Galanti echoed that sentiment, noting that the price would be “safe for a while.”
While Costco could certainly make more money by hiking the price of the hot dog combo to something better suited to, say, 2005 prices and still be a bargain in the face of modern-day pricing, Costco’s commitment to the cheap snack serves as a loss leader and a way to get people in the door.
Wagyu Beef, Gold Bars, Swing Sets, and Fake Trees
When Costco gets you in the door, there’s plenty for you to consider. You may have come in for a $1.50 hot dog and soda, but while you’re there, you’re likely to pick up quite a bit. Back in April, estimates noted that Costco was selling about $200 million in gold bars every month. Based on the word from its third-quarter earnings report, sales are brisk everywhere else too, as Costco reached $57.39 billion in sales, up 9.1% against 2023’s third quarter.
And this is in 2024 when customers are pulling back on purchases all over. But at Costco, they’re shelling out for top-end Wagyu beef, swing sets that run in the four-figure range, and artificial decorative trees for the house.
Is Costco Stock a Buy or Sell?
Turning to Wall Street, analysts have a Strong Buy consensus rating on COST stock based on 20 Buys and six Holds assigned in the past three months, as indicated by the graphic below. After a 60.12% rally in its share price over the past year, the average COST price target of $817.79 per share implies 2.59% upside potential.
