A top retail stock to own this year has undoubtedly been Costco Wholesale (COST 0.92%). Its shares are up more than 35% since January as it has been hitting new all-time highs along the way. Not only is it a stable investment given its extremely popular warehouses, but the company has also continually found ways to grow its business.

You might think that with the stock now trading at more than 50 times earnings and the economy potentially heading for a slowdown, shares of Costco Wholesale may be approaching a peak, finally. But there’s reason to remain bullish on the stock not just this year but for the long haul, as one area of its business has been booming for a while.

E-commerce sales are a huge opportunity for Costco

When you think of buying something online, odds are you’re going to go to either Amazon or Walmart. But Costco has the potential to be a big player in that arena as well. The company doesn’t separate its e-commerce sales when reporting quarterly numbers, but it does highlight the growth rate.

And on a monthly basis, the company has consistently been growing online sales by double digits. Below is a table of Costco’s comparable sales growth rates this year, by month, looking at both the total company sales and just e-commerce.

In every single month thus far this year, Costco’s online business has generated comparable year-over-year revenue growth of around 15% or better. And it has routinely been a top-performing part of the business. The company’s logistics business has been a key piece of that puzzle as the company reported that in its most recent quarter, which ended on May 12, deliveries through Costco Logistics increased by 28%.

The company remains a growth machine

Costco has demonstrated its versatility time and again over the years. During the early stages of the pandemic, its warehouses were crucial for consumers looking to load up on essentials. And it has done well amid rising inflation, as buying in large quantities helped customers keep their costs down on a per-item basis. Meanwhile, in the long run, a huge opportunity looks to be emerging in e-commerce.

And with the company’s business generating a lot of cash flow, it has plenty of resources it can put into its e-commerce operations and logistics business. In the trailing 12 months, Costco’s free cash flow totaled $7.4 billion. While it has been expanding into new markets and launching additional warehouses, e-commerce can provide Costco with yet another catalyst to exploit.

Is Costco Wholesale stock a good buy right now?

Costco’s stock may appear as though it’s running out of room to rise higher. But given how well the business has been performing of late, it wouldn’t be surprising if the company posts another solid quarter when it reports fiscal fourth-quarter results later this month. Consumers continue to see a lot of value from the retailer, and there’s still much more revenue growth on the horizon.

The stock does trade at a hefty premium to earnings, which implies a lot of future growth is already priced into its valuation, and that could limit its gains in the short term. If you’re not prepared to hang on for at least a couple of years, you may be better off investing in other, cheaper growth stocks. But with its business generating solid single-digit growth and many opportunities still out there for the company, it’s certainly not too late for long-term investors to load up on Costco’s stock.

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The location has good visibility and direct access to the major trade route Interstate 10 and can serve the Southern California ports to the West region.

The property is entitled and ready for development. Shopoff anticipates breaking ground in the third quarter of 2024, and the project is expected to take 12 months to complete.

Ian DeVries and Chris DeVries of Colliers International along with Brad Yates and Stefan Pastor of Stream Realty will handle tenant lease up. The firm will begin marketing the projects to tenants prior to project completion.

Upon completion, the project will total more than 1 million square feet, with 167 docks, 498 trailer stalls and a 42-foot clear height.

Stream Realty Partners Executive Vice President Brad Yates told Commercial Property Executive that as e-commerce and consumer demand continue to grow, the need for large-scale warehouse facilities is expected to increase. Desert Hot Springs, with its available land, infrastructure and proximity to major markets, presents opportunities for the expansion of million-square-foot warehouses to meet the evolving needs of the logistics industry.

I-10’s significant role

Interstate 10 plays a significant role in the economic landscape of Arizona and Southern California, serving as a major commerce corridor that fuels economic growth. Here are some key incentives and benefits it brings to the region:

The I-10 corridor runs across the U.S. from California to Florida, connecting major ports, cities and markets, and is a vital route for transportation and distribution.

Tanner Jansen, Stos Partners vice president of Acquisitions, told CPE that recent strikes by the dockworkers backed up ports’ production, but that has since been resolved and their supply has increased.

“There’s been larger demand due to the reduction of Panama Canal traffic from the drought conditions in Central America,” Jansen said. “This delay is causing increased cost, and some logistics demand that typically lands on the east coast, is landing on the west coast and is being transported across the country.”

“California and the West Coast markets are also seeing a recent reversal in their population declines that they suffered during the pandemic, which will bring back further demand for warehousing along the I-10,” Jansen added.

Improving the corridor’s infrastructure

Significant investments have been made to improve the corridor’s infrastructure, according to Yardi Matrix’s Doug Ressler.

The San Bernardino County Transportation Authority and the California Department of Transportation have invested in adding Express Lanes to I-10 in San Bernardino County, which will improve travel time and relieve congestion.

The project components are expected to yield a benefit/cost ratio of 8.0, representing over 500 million person-hours of savings over a 20-year analysis period. Freight benefits are estimated at $1.4 billion over the same period.

The corridor is being upgraded to address a nationally significant freight bottleneck, which will improve the efficiency and reliability of regional freight flows.

I-10 is considered the backbone of the transportation system, providing businesses and their customers with essentials like food and fuel. The interstate supports Arizona’s position at the heart of a regional economy that stretches from Southern California to Texas. This trillion-dollar market relies on I-10 for efficient links to trade and commerce.

Arizona has invested significantly in I-10, with projects such as widening the highway between Phoenix and Tucson. This $400 million investment aims to alleviate traffic pressure, improve public safety and accelerate future growth. These improvements and expansions of I-10 also position Arizona to receive additional federal funds, which can further enhance the state’s transportation infrastructure and economic prospects.

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