Costco to rally 14% this year on its new credit card deal, possible fee hike, Goldman says

A Costco store in Alhambra, Calif.
Frederic J. Brown | AFP | Getty Images

Investors should buy Costco shares because the retailer's profits will top expectations this year, according to Goldman Sachs, which reiterated its buy rating and added the company to its Americas conviction buy list.

"We believe the company is on the cusp of the earnings acceleration ... aided by its recent credit card deal," analyst Matthew Fassler wrote in a note to clients Thursday. "We also like the firm's attractive positioning as a low-cost/low-priced operator in the challenging retail environment. Our estimates stand above consensus."

Costco entered into a credit card partnership with Citigroup and Visa, which took affect in June 2016 and replaced the retailer's previous deal with American Express.