While the notion of retailer Costco (NASDAQ:COST) offering travel services might sound like something you’d see in “Idiocracy” or in certain cartoon series—hello, “American Dad” fans—it’s actually happening. And apparently, travel experts are finding this play a very good idea. That’s enough for Costco investors, who sent shares up fractionally in Wednesday afternoon’s trading.
The word from travel expert Mark Ellwood is that Costco might be a better place than you’d think to book your next excursion. Why? Because the same principles that allow shoppers to buy huge quantities of ketchup or toilet paper can be applied, in many cases, to travel. Costco’s website actually has a section devoted to travel, and Ellwood notes that travelers can find some fantastic deals therein.
This is particularly true for anyone looking for a flight and hotel package. I checked a flight/hotel package from O’Hare in Chicago to Las Vegas for a weekend in October and discovered 20 different packages available, several of which could be had for under $1,500.
The Most Important Item at Costco
Travel packages are just one of the many items sold at Costco, but what’s the most important item? According to CEO Ron Vachris, the most important sale item at Costco is its membership card. With over 130 million members to its credit, and each paying between $60 and $120 a year for the privilege, that’s where the bulk of its revenue lies. And it’s pretty substantial revenue at that; just last year, membership fees at Costco amounted to $4.6 billion.
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 66.69% rally in its share price over the past year, the average COST price target of $860.58 per share implies 0.18% upside potential.
