Why BMO Capital Markets thinks Costco shares still have room to run

Every weekend, the Financial Post breaks down the most interesting developments in this week’s world of investing, from top performers to surprising analyst calls and stocks you should have on your radar. Here’s this week’s edition.

Do investors at BlackBerry Ltd. (BB) finally have something to cheer about? That’s something analysts were musing about after shares of the smartphone pioneer turned cybersecurity play popped by nearly 12 per cent on Wednesday, following an earnings report that showed a first-quarter profit had turned positive. The Waterloo, Ont.-based company also “slightly” hiked its revenue forecast for the year. Though the stock pared some of its gains, BlackBerry shares still closed out the week up 4.7 per cent per cent at $6.21 in Toronto. BlackBerry had been among the Top-10 gainers on the S&P/TSX composite index as late as Thursday. The upbeat earnings lead Bloomberg Intelligence analysts to hazard that the tech firm “may be finding its footing” and were followed by a handful of price target increases. The biggest hike on the Toronto-listed shares came from CIBC Capital Markets, which raised its target to $8.24, a 30 per cent premium to Friday’s close.

The S&P500 hit a new all-time high on Friday despite renewed trade tensions between the U.S. and Canada and analysts are optimistic that there are more gains to come on both sides of the border before the year is out. This week, Brian Belski, chief investment strategist at BMO Capital Markets, reconfirmed his base case for the TSX to hit 28,500 this year, hinging the forecast on several factors including “relatively resilient” Canadian growth, falling interest rates and improving stock valuations. “Our view in terms of Canadian equities remains resolute. Namely, Canada continues to provide strong relative value, a converging growth profile with the U.S. and improving equity flows,” Belski said in a note. The TSX is up 7.9 per cent year to date and almost 18.9 per cent since Donald Trump’s reciprocal tariffs announcement in early April. Belski’s base case implies an additional seven per cent return by year end, and though he thinks U.S. markets will be stronger through the end of the year, he still has the TSX as the net winner for 2025.

Costco Wholesale Corp. (COST) has been one of the market’s top performers over the past decade, but don’t let its big run scare you away. BMO Capital Markets food retail analyst Kelly Bania said the stock has more room to grow and confirmed Costco as a top pick in a note out this week. Her refreshed rating is based on three major announcements made recently by the company: a $10 monthly credit on same-day Instacart orders for executive members; extended shopping hours, also for executive members; and a standalone gas station test taking place in California. “These new benefits and perks highlight Costco’s extreme membership value proposition, particularly the key executive membership base, which accounts for 47 per cent of members but 73 per cent of sales,” Bania said. Bania has set a price target of US$1,175, a level the stock topped on Feb. 13 before slumping in March. Year to date, Costco is up 7.5 per cent and closed Friday at US$985.14.