Jim Cramer addressed Costco Wholesale Corporation (NASDAQ: COST) directly on the April 24 episode of CNBC’s Mad Money. He was asked by a caller about the stock’s valuation and growth prospects. His answer was unambiguous.
Cramer said: “Okay, Costco sells at 49 times earnings. That’s where it’s been, 47, 49 for the last couple of years. It’s never cheap, never ever cheap. And it is always terrific. It’s one of the longest-owning stocks we have for the Charitable Trust.”
He acknowledged the stock’s volatility during its recent correction. He said: “And believe me, when it fell down to below $900, that was the opportunity. When it hit $850, I was nervous like everybody else. It just kept going down. But boy, I think it’s just sensational. Would I buy it right here? The answer is buy, buy, buy.”
The macro setup Cramer is pointing to involves two simultaneous forces. Higher gas prices make Costco’s fuel discount more valuable to members. That drives visits and card signups.
The second force is inflation positioning. As Iran war-linked price pressures persist across the US economy, Costco’s value proposition resonates more strongly. Members who need to stretch their grocery budget seek out the cheapest prices in bulk.
CEO Ron Vachris addressed Costco’s pricing strategy during its second-quarter earnings call. He said: “At Costco, we always want to be the first to lower prices and the last to raise them. During the second quarter, we lowered prices on key items such as eggs, cheese, coffee, and some paper products as we saw lower inflation in these commodities. We will continue to be a pricing authority, and as some tariffs have been reduced, we are lowering prices on affected items such as certain textiles, bedding, and cookware SKUs.”
CFO Gary Millerchip described the quarter as strong. The broader numbers support that view. COST trades near $1,028 with a 52-week high of $1,067 and a 52-week low of $844.
The valuation debate around COST is not new. It has traded at 40 to 50 times earnings for years. That premium reflects the membership flywheel, the pricing authority model, and an expanding international store base.
Cramer’s charitable trust has held COST for years. That long tenure across multiple valuation debates and earnings cycles provides a credibility that distinguishes his current buy call from casual enthusiasm.
Ewan is a reporter at the Foreign Policy Journal, primarily covering US current affairs and news related to NYSE-listed stocks. He has over two decades of experience in journalism and digital publishing.
