Costco is dominating ahead of the holiday season

Costco (COST) may be limiting toilet paper again from the grips of COVID-19 pandemic hoarders, but that hasn't slowed its sales momentum down one bit. 

In fact, the warehouse beast appears to be gaining momentum into the crucial holiday shopping season. 

Costco said Wednesday evening that October retail sales surged an otherworldly 17.5%. Sales in the U.S. and Canada rose 17% and 20.6%, respectively. Online sales increased 16%. Costco's store traffic and average transaction both increased in the month. 

Analysts were looking for a 9.3% overall same-store sales increase from Costco for the month. 

All of Costco's departments notched sales increases, paced by gains in consumable goods and fresh food as consumers continue to invest in their cupboards during the pandemic.

"We are raising 2022 and 2023 estimates due to our view that current momentum, which includes the second month in a row of accelerating comps on a two-year stack, will continue stronger for longer. Shopper engagement, basket building, and multi-category strength validate revenue is sustainable beyond the pandemic and COVID-related categories," said Jefferies analyst Stephanie Wissink in a research note to clients. 

Wissink reiterated a Buy rating on Costco and released a $580 price target on the stock. 

Costco's shares rose 3% to $518 in Thursday's session. 

Shares have increased 38% year-to-date compared to a 25% return for the S&P 500. Walmart (who owns Costco rival Sam's Club) and Target shares have increased 5% and 48%, respectively. 

Hardcore watchers of Costco this year are unlikely shocked by the retailer's October sales showing. 

Costco's same-store sales for the 52-weeks ended Aug. 29 increased 16%. E-commerce sales were up 44.4%. Membership fee income for the fourth fiscal quarter increased 11.7% from a year ago. Renewal rates for U.S. and Canada members is hovering around 91.3%. 

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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