$Costco (COST.US)$ Famous for its $1.50 hot dog, this classic low stock price commodity may still remain unchanged, but its stock price has continued to soar, becoming a high stock price luxury good for investors. However, ahead of next week's earnings report, the high valuation also means the company's tolerance for errors is smaller.

On Thursday, Costco's stock price fell slightly. The company reported a 5.6% year-on-year increase in November sales, with growth slowing compared to October. The total comparable sales growth fell to 3.1%, but the core comparable sales excluding rbob gasoline and exchange rates increased by 4.9%. The company pointed out that the later scheduling of Thanksgiving and Black Friday affected November's sales performance, while exchange rate changes caused a drag of over 1% on total comparable sales.

Nonetheless, analysts remain optimistic about Costco's stocks. Jefferies analyst Corey Tarlowe wrote in a report: 'Despite being impacted by adverse forex factors and shifts in holiday timing, the November sales results remain robust.' He maintained a 'buy' rating on Costco's stock and raised the target price from $1,050 to $1,145 to reflect recent productivity improvements.

According to FactSet data, more than half of analysts have given Costco's stock a 'buy' or similar rating. However, the current average target price is $969, slightly below the current trading price. So far this year, Costco's stock price has risen nearly 50%, far exceeding the 28% increase of the s&p 500 index and the 14.7% rise of the SPDR retail etf.

Despite Costco stocks traditionally enjoying a premium for their stable performance and a loyal, high-spending customer base, its future pe has now reached 54 times, the highest level in the past five years, and far above the historical average of 38 times. In comparison, the future pe for walmart and amazon is about 35 times.

Raymond James analyst Bobby Griffin acknowledged: 'Compared to historical standards, Costco's valuation is challenging.' But he also emphasized: 'The foundation of Costco's business model remains solid, and the advantages of long-term compound growth potential and market share expansion have not changed.' He maintained a 'outperform' rating for Costco and raised the target price from $980 to $1,030.

Stifel analyst Mark Astrachan is also optimistic about Costco, believing that the company's membership revenue model and its higher-than-peer comparable sales growth rate justify the premium. He raised the target price from $935 to $1,000.

Costco continues to benefit in the current retail environment thanks to its membership model and valuable retail positioning. Although inflation has eased, the cost of living remains a primary concern for consumers, and Costco's emphasis on "high cost performance" aligns well with this demand. The membership renewal rate exceeds 90%, and the long-awaited price increase this summer has further boosted investor confidence.

Despite Costco's consistently outstanding long-term performance, its high valuation leaves little room for error in the upcoming financial report. Costco will release its first-quarter financial report for fiscal year 2024 on December 12. Under the leadership of the new chief executive officer and chief financial officer, the company has maintained robust growth so far, but investors may be expecting a "flawless" quarter.

Editor/rice