There are a number of reasons, including the company's strong performance and expansion plans. An improved sales climate should also help Costco.
The stock has been weak because of a shorter Easter selling season. The cycling of last year's strong sales in Japan also negatively skewed same store sales for April.
Costco is expected to report third quarter fiscal 2015 revenue of $26.6 billion and $1.16 in earnings. Revenue should be up about 3%. Revenue would have been higher, but gasoline price deflation and the strong US dollar weighed down results. Factoring out gasoline price fluctuations and foreign currency issues, same store sales would have probably been up 7% this year.
Costco is seeing increased store traffic. Higher membership fee income has also been a tailwind. The company raised membership fees in fiscal 2012.
Still, the biggest reason the stock can go higher is an accelerated club-opening schedule. Costco is expected to open 30 new clubs this year and an additional 25 to 30 a year over the next several years. Roughly half those new clubs will be overseas.
The international business is only 22% of revenue, so there could be years of growth ahead. International customers are driving higher same store sales. While US same store sales usually rise in the 2% to 3% range, international markets routinely report 5% to 8% same store sales growth.