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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