1 Big Catalyst for Costco Stock Right Now

Costco Wholesale (NASDAQ: COST) lost market confidence last year as investors fretted about the impact of prolonged inflation. But the retail giant has demonstrated why it's never a good idea to bet against it, and the stock is soaring again as sales growth accelerates. Even better, inflation has been working in its favor.

Here's why it's an important growth catalyst right now.

Inflation is raging

High inflation has been a problem for far too long, and the war with Iran has only made it worse. Inflation reached 4.2% in May, the highest rate in three years.

When prices are rising, Costco becomes an even more important part of its members' lives. Its strategy is to offer the lowest prices available, and it marks products up just enough to cover the associated costs and overhead. It also sells in bulk, which is cheaper, and it has leverage with suppliers to keep costs as low as possible.

That's enough to keep members loyal at any time, and even more so when every penny counts. Today, a key element of that is specifically fuel prices. Most of the company's U.S. warehouses feature a gasoline station, but not every member uses its pumps.

With most of the gas stations on the store premises, it doesn't always make sense for shoppers to fill up there; other stations are more convenient. But with soaring prices, more shoppers are finding it worthwhile to refuel at Costco. That's a revenue driver right there, and there are further implications.

The membership model is key

In the 2026 fiscal third quarter (ended May 10), each four-week period successively had record-breaking volume, with the last five weeks of the quarter its highest-volume five-week period ever. Comparable-store fuel sales (comps) grew in the range of 20%, while overall comps increased 9.8%.

Costco attracted new users for the service, and it anticipates this being a long-term growth driver, since shoppers who fill up tend to spend more in stores as well. It's also increasing its gas stations, which expands the opportunity.

Higher oil prices are hurting retailers, but the positive outweighed the negative for Costco in the quarter, with sales benefiting from inflated fuel prices by about 2.2%.

Shoppers allocated more of their budgets to fuel in the quarter, implying that lower gas prices won't necessarily mean lower sales for Costco; it's just likely to be reallocated elsewhere.

In general, the retail chain attracts a more affluent crowd that's willing to pay a membership fee. This cohort is more resilient during economic challenges, driving momentum at stores. It's a model that works, and Costco is well positioned to maintain strong sales in any kind of economy.

Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.