Lesson 2 of the free course · Worked example · 15 min read

Investment checklist: 10 checks before you buy a stock

Ten simple checks on you, the company, the price and your plan. We work through most of them on Costco using its latest annual report and real share prices. Then you score any stock and print your checklist.

Written by the StockEducation Editorial Team · Updated · How we check lessons

Quick answer

What should you check before you buy a stock?

Check ten things before you buy a stock. You: your goal, emergency savings and how much to put in one stock. The company: how it makes money, its growth, debt and cash. The price and risks: the P/E ratio and what could go wrong. Your plan: when you’d sell and how you’ll buy.

  1. Your goal and timeline
  2. An emergency fund, and no high interest debt
  3. How much to put in one stock
  4. How the company makes money
  5. Growth in sales and profit
  6. Debt, cash and share count
  7. The price, using the P/E ratio
  8. The main risks
  9. When you would sell
  10. How you will buy

Go to the checklistSee the Costco exampleRead the FAQ

The checklist

Your free 10 point investment checklist

Check off an item only when you can answer it in writing. Each one links to how to do it. Print it or save it as a PDF to use on any stock.

You

How to check
How to check
How to check

The business

How to check
How to check
How to check

The price and the risks

How to check
How to check

Your plan

How to check
How to check
0 of 10 checks passedYour stock

Check off each item you can answer in writing.

Your answers stay on this device. Passing all ten doesn’t make a stock safe. It means you did the homework.

Create a free account to save progress to save your course progress and unlock the $1,000,000 practice simulator.

Part 1 of 4 · You

Are you ready to buy a stock?

The first three checks are about you and your money. Skip them and even a great stock can hurt you, because you may have to sell at a bad time.

1

Why are you buying, and when will you need the money?

Write one sentence about what this money is for and when you’ll need it. Money for next year’s car isn’t stock money. Stock prices fall often. The S&P 500, an index of 500 large U.S. companies, lost money in 26 of the 98 years from 1928 to 2025. That’s about one year in four.1 So invest only money you can leave alone for five years or more, the rule from Lesson 1.

Costco example

Even a steady company can drop hard. Costco shares fell 31.5% in six weeks, from $608.05 on April 7, 2022 to $416.43 on May 20, 2022. They didn’t close above $608.05 again until December 7, 2023, 20 months after the old high.2

2

Do you have an emergency fund and no high interest debt?

Keep cash for surprise bills in a separate savings account,3 so a broken car never forces you to sell stocks at a bad time. FINRA suggests building it to about three to six months of living expenses, and says even a small fund is better than none.4 Many people aren’t there yet. In 2025, only 63% of U.S. adults said they would cover a $400 emergency with cash or its equivalent.5

Pay off credit cards first. On credit cards that charge you interest, the average rate was 22.36% a year in August 2026 (a preliminary Federal Reserve figure).6 Paying that off is like a sure 22% return, which no stock can promise.

Could you cover a $400 surprise bill with cash?

U.S. adults in 2025. Source: Federal Reserve, Economic Well Being of U.S. Households.5
3

How much of your portfolio should go into one stock?

Any single stock can fall a long way and never come back. A J.P. Morgan study looked at U.S. stocks from 1980 to 2014. About 4 in 10 fell 70% or more from their peak and never meaningfully recovered.7

So set a limit before you buy. T. Rowe Price treats one stock above 5% of a portfolio as worth addressing, and above 10% as a greater risk.8

Spreading money across many holdings means a loss in one can be offset by others.9

Pick a portfolio size to learn with

The examples below use it. Nothing is bought; your choice stays on this device.

Costco’s 2022 fall of 31.5%, on a $10,000 portfolio

Lost in the fallRest of the portfolio
Loss = portfolio × share in the stock × 31.5%. The 31.5% is Costco’s closing price fall from April 7 to May 20, 2022.2
Try your own position size

One stock in a $10,000 portfolio

Drag the slider
1%50%
In this stock$1,000
Lost in a 31.5% fall$315
Lost if it halves$500

A 31.5% fall in a 10% position costs 3.2% of your $10,000 portfolio. If the stock halves, you lose 5.0%.

The rule

Keep each stock small enough that you could live with it falling by half.

Marks Part 1 done

Part 2 of 4 · The business

Is it a good business?

Checks 4 to 6 use the company’s annual report, the Form 10-K.10 We use Costco’s 10-K for fiscal 2026, its business year that ended August 30, 2026. It was filed on October 7, 2026.11 Open Costco’s filings on EDGAR, the free website of the SEC, the U.S. securities regulator, and follow along.

Where each number sits in a 10-K

Where to find each number in a 10-K

What you needWhere it is
How it makes money, members and renewalsItem 1, Business
The risks, in the company’s wordsItem 1A, Risk Factors
Managers’ explanation of the yearItem 7, Management’s Discussion and Analysis
Revenue, operating income, net income and EPSItem 8, the income statement
Cash and debtItem 8, the balance sheet
Operating cash flow and spending on stores and equipmentItem 8, the cash flow statement
Shares outstandingThe cover page
The same layout applies to every U.S. company’s 10-K. Source: Investor.gov, How to Read a 10-K.10
4

How does the company make money, and why do customers stay?

If you can’t explain it in two sentences, you don’t yet know what you own. Read Item 1, Business, of the 10-K, then ask why customers keep coming back. That staying power is the company’s edge, often called a moat. Sticking to businesses you understand is your circle of competence. Then check who runs it, using our lesson on researching a management team.

Costco example

Costco sells groceries, gas and household goods at prices only a little above what it pays. Its 84.1 million paid members pay a yearly fee to shop. Membership fees were $5.9 billion in fiscal 2026. That’s only 2% of revenue, but equal to about half of its $11.7 billion operating income, the profit from running the business. Members keep paying: 92.3% renewed in the U.S. and Canada.11

Why the fees matter so much

Membership fees: a small slice of sales, a big slice of profit

Membership fees, $5.9 billionEverything else
Costco doesn’t have to buy goods to earn a membership fee, so almost all of the fee is profit. That’s why fees are only 2% of revenue but equal to about half of operating income. It’s also why renewals matter so much. Fiscal 2026 figures, Costco Form 10-K.11
Who runs Costco

Ron Vachris has been CEO since January 2024, after two years as president and chief operating officer.1211 Costco says he started there as a forklift driver more than 40 years ago.12 Its 10-K says most of its officers have more than 25 years with the company.11

5

Are sales and profits growing?

Look at the trend over five years. Revenue (total sales), operating income and earnings per share (EPS, the profit for each share) should rise over time. Use diluted EPS, which also counts shares the company may still issue, such as stock awarded to employees. Profit should grow at least as fast as sales.

Costco example

Revenue rose 10.1% to $303.2 billion in fiscal 2026. Net income, the profit left after all costs and taxes, rose 14% to $9.2 billion. Comparable sales, from warehouses open more than a year, rose 8%. EPS climbed from $11.27 in fiscal 2021 to $20.76, about 13% a year.11 Costco also raised its quarterly dividend 13% in April 2026, to $1.47 a share.1113

Costco EPS, the profit for each share, by fiscal year

$11.27
$13.14
$14.16
$16.56
$18.21
$20.76
202120222023202420252026
Up every year, from $11.27 to $20.76. Fiscal years end around August 31. Source: Costco Form 10-K filings.11
6

Is the balance sheet strong, and is profit backed by cash?

First, can the company carry its debt? Compare debt with cash. Then divide operating income by the yearly interest bill, a ratio called interest coverage. The higher it is, the safer the debt.

Next, is profit backed by cash? Free cash flow is the cash from running the business minus capital spending, the money spent on buildings and equipment. If it rarely comes close to net income, be careful.

Last, check the share count. New shares shrink your slice of the company. Buybacks, when a company buys back its own shares, grow it.

A simple pass line: operating income is at least 5 times the yearly interest bill. Free cash flow stays close to net income over several years. The share count isn’t climbing. That’s our rule of thumb, not an official standard.

Go deeper: the balance sheet · the cash flow statement · company debt · dividends, buybacks and dilution

Cash and short term investments, money it can reach quickly$21.3B
Debt, the bonds and loans it must repay$6.2B
Free cash flow: $15.8B from operations minus $6.4B spent on stores and equipment$9.4B
Net income$9.2B
Costco example

Cash is bigger than debt by about $15.1 billion. Its yearly interest bill was $145 million, and operating income was about 80 times that. So profit could fall a long way and still cover the interest.11

Free cash flow was 102% of net income, so the profit is real cash. The share count barely moved, at about 444 million shares in both fiscal 2025 and 2026.11

See a company that fails these checks: Intel

What failing looks like: Costco against Intel

Costco passes checks 5 and 6. To see what failing looks like, here’s Intel, the chip maker, from its annual report for 2025.14 It also suspended its dividend starting in late 2024.14

CheckCostco, fiscal 2026Intel, fiscal 2025
5. Growth over five yearsPasses EPS up from $11.27 in 2021 to $20.76.Fails Revenue down 32%, from $77.9 billion in 2020 to $52.9 billion. EPS fell from $4.94 to a loss of $0.06.
6. Debt and cashPasses $21.3 billion of cash against $6.2 billion of debt, and interest covered about 80 times.Fails $46.6 billion of debt against $37.4 billion of cash and short term investments, with a net loss for the year.
6. Free cash flowPasses $9.4 billion, 102% of net income.Fails Negative $8.0 billion: $9.7 billion from operations minus $17.7 billion spent on factories and equipment.
6. Share countPasses About 444 million in both years.Fails Up 15% in a year, from 4.33 billion to 5.00 billion shares.
7. P/ENeeds growth 47.3, so the price assumes strong growth.No P/E None. It lost money in 2025, so there are no earnings to divide by.

Intel: Form 10-K for the fiscal year ended December 27, 2025; share counts from the covers of its last two annual reports. Free cash flow is operating cash flow minus all capital spending, the same method as Costco’s.1411

Failing these checks doesn’t tell you where Intel’s stock goes next. It tells you that owning it is a bet on a turnaround, which is riskier than owning a business that already passes. This is a teaching example, not a recommendation to buy or sell either stock.

The rule

Own the business before you own the stock. If you can’t explain it, measure it and trust its cash, stop here.

Marks Part 2 done

Part 3 of 4 · The price and the risks

Is the price right, and what could go wrong?

7

Is the stock overvalued? Check the P/E ratio

The price to earnings ratio (P/E) is the share price divided by the last year’s earnings per share. Use it to judge whether a price is high or low compared with the company’s past or with other companies.15

A simple pass line: the P/E sits inside its own range of recent years and isn’t far above close rivals’. If it’s higher, write down what growth would justify it.

A high P/E usually means buyers expect strong growth, so you pay today for growth that hasn’t happened yet. If a company has no profit yet, the P/E doesn’t work: compare its market cap with its sales instead. Our P/E ratio lesson goes deeper.

Costco example, step by step
  1. Price: $982.00, the closing price on October 14, 2026.2
  2. EPS: $20.76 for fiscal 2026.11
  3. P/E: $982.00 ÷ $20.76 = 47.3. You pay $47.30 for each $1 of yearly profit.
  4. Earnings yield: $20.76 ÷ $982.00 = 2.1%. A 10 year Treasury paid 5.19% that day.16

So buyers accept a 2.1% earnings yield when a Treasury pays 5.19%. They’re betting that Costco’s profit keeps growing fast.

What the price assumes. If buyers later pay only 38.4 times earnings, Costco’s lowest year end P/E since 2021, EPS must reach $25.57 just to hold the $982 price. That’s 23% more profit per share, about two more years of growth at 11%. Less than that and the price falls even though the business grew.

Costco’s P/E next to two rivals, October 14, 2026

CompanyPriceEPS, last 12 monthsP/E
Costco$982.00$20.7647.3
Walmart$116.16$2.7741.9
BJ’s Wholesale Club$103.39$4.5722.6
Closing prices on October 14, 2026. EPS is each company’s profit per share over its last 12 months of reports; for Costco, that’s fiscal 2026. Walmart’s profit includes gains and losses on shares it owns in other companies, so it swings more. Sources: company filings and price histories.211171819

Costco’s P/E is higher than both rivals’, so its price assumes faster growth than theirs. BJ’s, another membership warehouse club, costs less than half as much per $1 of profit.

Costco’s P/E at each fiscal year end since 2021

Costco’s P/E at each fiscal year end, and now

40.0
40.5
38.4
53.9
51.8
45.5
47.3
202120222023202420252026Oct 14
Each bar is the closing price on the last trading day of the fiscal year, divided by that year’s EPS. The last bar uses the October 14, 2026 close. Sources: Costco Form 10-K filings and Nasdaq closing prices.112
Think first: why did Costco’s stock barely move in fiscal 2026 when its profit per share rose 14%?

Because investors paid a lower P/E. Shares closed at $943.32 on August 29, 2025 and $945.47 on August 28, 2026, up just 0.2%. EPS rose from $18.21 to $20.76, so the P/E fell from 51.8 to 45.5. A falling P/E can cancel out a whole year of profit growth. That’s why price is a separate check from the business.

Try the price check on any stock

Price check

Type your numbers
P/E47.3
Earnings yield2.11%
Gap to Treasury3.08 points lower

You pay $47.30 for each $1 of yearly profit. The earnings yield, profit as a share of the price, is 3.08 points below the 10 year Treasury yield. Buyers are counting on growth to close the gap.

Find EPS on the income statement of the latest 10-K, or add up the last four quarters. A company with losses has no meaningful P/E.

8

What could go wrong, and could you hold through a big drop?

Item 1A of the 10-K, Risk Factors, lists the risks in the company’s own words. Pick the three that would change your mind about owning the stock, and find one number to track for each.

Costco’s three risks, and the number to watch for each
1Most profit comes from one region

The U.S. and Canada made 86% of sales and 83% of operating income in fiscal 2026. California alone was 26% of U.S. sales.11

WatchSales growth by region in each quarterly report.
2Members stop renewing

Costco says weaker membership growth or loyalty could hurt its results. Renewal was 92.3% in the U.S. and Canada and 89.8% worldwide.11

WatchThe renewal rate in every report.
3Competition and costs

It names strong competition from other retailers, shopping through online and AI tools, and higher tariffs as risks.11

WatchGross margin, the share of sales left after paying for the goods: 11.09% in fiscal 2026.

Two real falls while profits kept rising

Peak to low closing prices: $608.05 to $416.43 in 2022, and $1,076.86 to $850.00 in 2025. Costco closed at a record $1,094.32 on May 19, 2026, then at $982.00 on October 14, 2026, 10.3% below it.2

Could you hold through a fall like that without selling? If not, the position is too big. Go back to check 3.

Your turn

Run Costco through the Stock Risk Analyzer. It opens with COST, a cautious beginner profile and a holding period of a year or more filled in. It returns a risk score and the reasons behind it.

Open the Stock Risk Analyzer Free, with a daily limit. Then try your own ticker.
The rule

A great company at any price isn’t a plan. Know what you pay and what could go wrong.

Marks Part 3 done

Part 4 of 4 · Your plan

What is your plan before you click buy?

9

When would you sell the stock?

Write your sell rules before you buy, while you’re calm. Research shows why. A study of 10,000 brokerage accounts found that investors sold winners too soon and held losers too long. Over the next year, the winners they sold beat the losers they kept by 3.4%.20

Trading a lot also hurts: from 1991 to 1996, the households that traded most earned 11.4% a year while the market returned 17.9%.21

Tie your rules to how the business is doing. Our risk management plan lesson shows the method.

Rules an owner might write for Costco
Rules an owner might write, using Costco, for teaching only
  • “I’ll review the position if the U.S. and Canada renewal rate falls below 90% for two reports in a row.” It’s 92.3% now.
  • “I’ll review it if operating income falls below 3% of revenue and stays there.” It was 3.9% in fiscal 2026.
  • “I’ll review the position if it grows past my limit from check 3.”
  • “A falling price alone won’t make me sell.” Costco’s 2022 fall came while its earnings kept rising.
10

How will you buy it: broker, order, account and taxes?

Use a registered broker; FINRA BrokerCheck lets you look one up free.22 Check the costs: any commission and the spread, the gap between the buy and sell price.

Place a limit order, which sets the most you’ll pay. A market order fills right away at whatever price is available.23 See how stock orders work.

Choose the account first. A Roth IRA is a retirement account you fund with money you’ve already paid tax on. Its growth isn’t taxed. You can take your contributions back out any time, and earnings come out tax free once you’re 59½ and five years have passed since your first Roth IRA contribution.24 A 401(k) is a retirement plan you get through work. Many 401(k) plans offer only a menu of funds, so you can’t buy a single stock in them.

In a taxable brokerage account, you owe tax on dividends each year and on gains when you sell. Gains on a stock held one year or less are taxed at the same income tax rates as your wages. Hold it more than one year and most people pay no more than 15%.25

How the IRS taxes a gain on a stock

How the IRS taxes a gain on a stock

How long you held itHow the gain is taxed
One year or less (short term)As ordinary income, at the same rates as your wages
More than one year (long term)At 0%, 15% or 20%, depending on your taxable income
Federal rates for most stock gains in a taxable account. Higher earners can also owe an extra 3.8% tax on investment income, called the net investment income tax. It starts above $200,000 of income for single filers and $250,000 for married couples filing jointly. Sources: IRS Topics No. 409 and No. 559.2526
Costco example

At $982 a share, one Costco share is almost 10% of a $10,000 portfolio. Some brokers offer fractional shares, so you can buy a set dollar amount, such as $500, instead of a whole share. That keeps a stock inside your limit.

How Costco reads on the ten checks
CheckCostco, fiscal 2026Reading
1 to 3Your goal, safety net and position sizeYour call
4. BusinessLow prices plus fees from 84.1 million paid members; 92.3% renewPasses
5. GrowthRevenue up 10.1% and EPS up 14%; EPS up about 13% a year since 2021Passes
6. Debt and cash$21.3 billion of cash against $6.2 billion of debt; free cash flow 102% of net income; share count steadyPasses
7. PriceP/E 47.3: above Walmart’s 41.9 and BJ’s 22.6, and inside its own range of 38.4 to 53.9 since 2021Needs growth
8. RisksOne region, renewals, competition and tariffsKnow them
9 and 10Your sell rules, broker, order type and accountYour call

How the checks read on October 15, 2026, using the sources below. This is a teaching example, not a recommendation to buy or sell Costco.

The rule

The business can pass while the price still needs a lot to go right. The checklist makes you look at both.

Marks Part 4 done

Quick check

Quick quiz: can you use the checklist?

0 of 3 answered

1. A stock trades at $50 and earned $2.50 per share last year. What is its P/E?

Answer: B, 20.$50 ÷ $2.50 = 20. You pay $20 for each $1 of yearly profit, an earnings yield of 5%.

2. Where in a 10-K does a company list what could hurt its business?

Answer: A, Item 1A.Costco’s Risk Factors section names its reliance on the U.S. and Canada, membership loyalty, competition and tariffs, among others.

3. You have $20,000 invested and 10% of it in one stock. That stock falls 30%. How much of your whole portfolio did you lose?

Answer: C, 3%.$2,000 × 30% = $600, which is 3% of $20,000. Position size decides how much any one mistake can cost.
Think it through: why does check 3, position size, come before any company research?

Because no amount of research removes the chance of a big fall. Costco passes every business check, yet it fell 31.5% in 2022 and 21.1% in 2025. Your position size decides how much a fall like that costs your portfolio.

Questions people ask

Investment checklist FAQ

How do you know if a stock is worth buying?

Ask two separate questions: is it a good business, and is the price sensible? Checks 4 to 6 test the business and check 7 tests the price. Costco passes the business checks, but at 47.3 times earnings on October 14, 2026, above Walmart and BJ’s, its price already assumes strong growth.

What is a good P/E ratio for a stock?

There’s no single good number. A P/E only means something next to the company’s own past and its rivals.15 On October 14, 2026, Costco’s P/E was 47.3, Walmart’s 41.9 and BJ’s 22.6. A higher P/E means buyers expect faster growth, so the company has to deliver it.

How much of my portfolio should I put in one stock?

There’s no official limit. A common guide is to keep any one stock to 5% of your portfolio or less.8 At that size, even a 50% fall in one stock costs you only 2.5% of your total. An index fund spreads your money across hundreds of stocks in one purchase.

What are the red flags before buying a stock?

Watch for five company red flags: profit that never becomes cash, debt outgrowing profit, falling sales, many new shares, and late or corrected reports. Our lesson on accounting red flags shows real cases. Also walk away from anyone who promises guaranteed returns or pushes you to buy now, two classic signs of fraud.27

Should a beginner buy individual stocks or an index fund?

Many beginners start with an index fund, which holds hundreds of stocks at once. Picking winners is hard even for professionals. About 90% of U.S. large company funds run by stock pickers trailed the S&P 500 over the 15 years through 2025.28 One study looked at U.S. stocks from 1926 to 2016. Most single stocks did worse over their lifetimes than one month Treasury bills, which are about as safe as investing gets. Just 4% of companies produced all of the market’s gain above those bills.29 If you buy single stocks, keep each one small and use this checklist.

Next steps

You finished the investment checklist.

You can now test any stock against ten checks and judge the business and the price separately. Next, practice where mistakes cost nothing. Even with virtual money, fewer than half of practice investors were ahead in our PaperTrade snapshot of October 6, 2026: 77 of 166, or 46.4%.30

Free, no card. A free account saves your progress and unlocks the $1,000,000 practice simulator. Lessons stay free to read without one.

Your checklist on one card, and the learning path
  1. Step 1 · DoneThe investment checklist
    See the checklist on one card
    1. Goal and timeline. Know why, and leave it five years or more.
    2. Safety net. Emergency cash first, credit cards paid off.
    3. Position size. A cap you can live with if the stock halves.
    4. How it makes money. Two sentences from Item 1 of the 10-K, and who runs it.
    5. Growth and profit. Five years of rising revenue and EPS.
    6. Debt and cash. Debt covered, free cash flow near profit, share count steady.
    7. Price. P/E against its own history and its rivals.
    8. Risks. Three from Item 1A, each with a number to watch.
    9. When you would sell. Written before you buy, tied to the business.
    10. How you buy. Registered broker, low costs, limit order, and know how your account, holding period and income affect taxes.
  2. 2
    Step 2 · NowSave your progress with a free account

    Keep your course progress and practice this checklist on real U.S. stocks with $1,000,000 of virtual cash.

    Create a free account to save progress No card needed. Lessons stay free to read.
  3. 3
    Step 3Follow the learning path
    The learning pathFree

    Learn the rest in the right order

    Ten modules of lessons, videos, tools and quizzes, ordered so each step builds on the last, from market basics to company analysis and risk.

    Continue to step 4 on the path

Want the full sequence? See the course outline →

Sources and assumptions

  1. NYU Stern, Aswath Damodaran: Historical Returns on Stocks, Bonds and Bills, 1928 to 2025, updated January 5, 2026. S&P 500 with dividends: negative in 26 of 98 calendar years, including 2008 (36.55% loss) and 2022 (18.04% loss).
  2. Nasdaq: Costco (COST) historical quotes. Closing prices used: April 7, 2022 $608.05; May 20, 2022 $416.43; December 7, 2023 $610.95; February 13, 2025 $1,076.86; December 22, 2025 $850.00; May 19, 2026 $1,094.32; October 14, 2026 $982.00; and the last close of each fiscal year from August 27, 2021 to August 28, 2026. Retrieved October 15, 2026. If Nasdaq’s table is unavailable, the same closes are on Yahoo Finance and stockanalysis.com.
  3. Consumer Financial Protection Bureau: An essential guide to building an emergency fund. Supports keeping cash in a separate account for unplanned expenses.
  4. FINRA: Avoid Bad Financial Luck This Friday the 13th With These 5 Tips, March 13, 2026. “Ideally, you want it to eventually equal about three to six months’ worth of living expenses, but even a small emergency fund is better than nothing.”
  5. Federal Reserve: report on the economic well being of U.S. households in 2025, released May 13, 2026. 63% of adults would cover a $400 emergency expense using cash or its equivalent.
  6. Federal Reserve G.19 Consumer Credit, release of October 7, 2026: interest rate on credit card accounts assessed interest, 22.36% in August 2026, marked preliminary.
  7. Michael Cembalest, J.P. Morgan: The Agony and the Ecstasy, the risks and rewards of a concentrated stock position, data through July 31, 2014. Since 1980, roughly 40% of Russell 3000 stocks suffered a permanent decline of 70% or more from their peak.
  8. T. Rowe Price: Helpful actions you can take to reduce concentration risk in your portfolio, August 2026. A single stock above 5% of a portfolio is worth addressing; above 10% is greater risk.
  9. Investor.gov: Asset Allocation and Diversification. Supports spreading money so a loss in one holding can be offset by others.
  10. Investor.gov: How to Read a 10-K. Explains the Business, Risk Factors and management’s discussion sections, and where filings are found.
  11. Costco Wholesale Corporation, Form 10-K for the fiscal year ended August 30, 2026, filed October 7, 2026, and the fiscal 2021 to 2025 Form 10-K filings in Costco’s EDGAR filing list (diluted EPS: 2021 $11.27, 2022 $13.14, 2023 $14.16, 2024 $16.56, 2025 $18.21). Revenue $303,154 million; net sales $297,247 million; membership fees $5,907 million; operating income $11,685 million; net income $9,226 million; diluted EPS $20.76; cash and equivalents $20,207 million plus short term investments $1,094 million; long term debt $3,914 million plus a current portion of $2,248 million; operating cash flow $15,817 million; capital expenditures $6,435 million; interest expense $145 million; 84.1 million paid members; renewal rates 92.3% and 89.8%; comparable sales up 8%; Item 1A Risk Factors.
  12. Costco Wholesale Corporation, Form 8-K exhibit 99.1, October 18, 2023. The board elected Ron Vachris, president and chief operating officer since February 2022, as president and chief executive officer effective January 1, 2024, and describes “over forty years of service to the Company, starting as a forklift driver.” The fiscal 2026 10-K lists him as president and CEO and says most officers have over 25 years of service.
  13. Costco Wholesale Corporation, Form 8-K exhibit of October 14, 2026. Quarterly cash dividend of $1.47 a share; the 10-K reports a 13% increase approved in April 2026.
  14. Intel Corporation, Form 10-K for the fiscal year ended December 27, 2025, filed January 23, 2026, with its fiscal 2024 and 2020 10-K filings. Revenue $52,853 million (2020: $77,867 million); diluted EPS a loss of $0.06 (2020: $4.94); net loss attributable to Intel $267 million; cash and cash equivalents $14,265 million plus short term investments $23,151 million; short term debt $2,499 million plus long term debt $44,086 million; operating cash flow $9,697 million; gross capital expenditures $17,672 million; shares outstanding 4,995 million on January 16, 2026 and 4,330 million on January 24, 2025. The fiscal 2024 10-K says Intel “suspended the declaration of quarterly dividends starting with the fourth quarter of 2024.”
  15. Investor.gov: Price earnings (P/E) ratio. A way of gauging whether a stock price is high or low compared to the past or to other companies.
  16. U.S. Department of the Treasury: Daily Treasury Par Yield Curve Rates, October 2026. 10 year yield 5.19% on October 14, 2026.
  17. Walmart Inc., Form 10-Q for the quarter ended July 31, 2026, and earlier quarterly filings. Diluted EPS attributable to Walmart: $0.77 (quarter ended October 31, 2025), $0.53 (quarter ended January 31, 2026, from the fourth quarter earnings release), $0.67 (April 30, 2026) and $0.80 (July 31, 2026); total $2.77.
  18. BJ’s Wholesale Club Holdings, Inc., Form 10-Q for the quarter ended August 1, 2026, and earlier quarterly filings. Diluted EPS: $1.15 (quarter ended November 1, 2025), $0.96 (quarter ended January 31, 2026, from the fourth quarter earnings release), $1.10 (May 2, 2026) and $1.36 (August 1, 2026); total $4.57.
  19. Walmart (WMT) and BJ’s (BJ) price histories: closes on October 14, 2026 of $116.16 for Walmart and $103.39 for BJ’s, the same on stockanalysis.com and Yahoo Finance. Retrieved October 15, 2026.
  20. Terrance Odean: Are Investors Reluctant to Realize Their Losses? The Journal of Finance, volume 53, number 5 (October 1998), pages 1775 to 1798. Winners sold beat losers kept by 3.4% over the next year.
  21. Brad Barber and Terrance Odean: Trading Is Hazardous to Your Wealth. The Journal of Finance, volume 55, number 2 (2000), pages 773 to 806. 66,465 households, 1991 to 1996: those that traded most earned 11.4% a year; the market returned 17.9%.
  22. FINRA BrokerCheck. Look up a broker’s registration, licenses and any disciplinary history.
  23. Investor.gov: Types of Orders. Market and limit orders.
  24. IRS Publication 590-B (2025), Distributions from Individual Retirement Arrangements: What are qualified distributions? A Roth IRA distribution is qualified, and tax free, if it’s made after the five year period that starts with your first Roth IRA contribution year and on or after age 59½, or because of disability, death or a first home purchase.
  25. IRS Topic No. 409, Capital gains and losses, updated September 24, 2026. A gain is long term if the asset was held more than one year, and short term if held one year or less. Short term gains are taxed as ordinary income. Net capital gain is generally taxed at 0%, 15% or 20%, depending on taxable income. The rate on most net capital gain is no higher than 15% for most individuals. Individuals with significant investment income may also owe the net investment income tax.
  26. IRS Topic No. 559, Net investment income tax, updated September 24, 2026. A 3.8% tax on net investment income for individuals whose modified adjusted gross income is above $200,000 (single) or $250,000 (married filing jointly).
  27. Investor.gov: Red Flags of Investment Fraud Checklist. Includes promises of guaranteed returns and pressure to invest right now.
  28. S&P Dow Jones Indices: SPIVA U.S. Scorecard, year end 2025, March 3, 2026. 89.93% of all actively managed large cap funds underperformed the S&P 500 over the 15 years ended December 31, 2025.
  29. Hendrik Bessembinder: Do Stocks Outperform Treasury Bills? Journal of Financial Economics, volume 129, number 3 (2018), pages 440 to 457. The best performing 4% of listed companies explain the net gain of the U.S. stock market since 1926, while the other stocks collectively matched one month Treasury bills. Most common stocks had lifetime buy and hold returns below one month Treasury bills. The sample covers U.S. stocks from 1926 to 2016.
  30. StockEducation: PaperTrade snapshot, October 6, 2026. Our own simulator data: 77 of 166 tracked practice accounts were profitable. The money is simulated and the group is self selected, so these aren’t real investment results.

All figures are in U.S. dollars. Fiscal year P/E uses the last closing price on or before each fiscal year end and that year’s diluted EPS. Rivals’ P/E ratios use diluted EPS for their last four reported quarters. Debt excludes leases. Free cash flow is operating cash flow minus capital expenditures. Prices aren’t adjusted for dividends. Position examples assume nothing else in the portfolio moves. Studies describe past results and can’t tell you what will happen next. Figures checked October 15, 2026.

StockEducation provides general education, not personal financial, tax or legal advice. Costco, Walmart, BJ’s and Intel are teaching examples only. Nothing here recommends buying or selling them or any other security. Investing involves risk, including the loss of money you invest.

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