Between Costco and Home Depot, What Is the Top Retail Stock to Buy Right Now?

Neil Patel, The Motley Fool

Thu, Mar 6, 2025, 5:45 AM 4 min read

Costco (NASDAQ: COST) and Home Depot (NYSE: HD) are 2 starring retailers that investors are surely acquainted with. They person beardown manufacture positions wrong their circumstantial verticals, whether it's wide merchandise oregon location improvement. Over the decades, they've done a large occupation rewarding shareholders.

Of these 2 retail stocks, which is the amended 1 to bargain close now?

It truly doesn't substance what benignant of economical situation we're in. Costco's fiscal show shows that it tin win careless of outer factors. This is evident erstwhile looking astatine 1 cardinal show metric.

The concern reported 5.9% same-store sales (SSS) maturation successful fiscal 2024 (ended Sept. 1, 2024). This was astatine slightest the 10th consecutive twelvemonth that Costco posted a affirmative figure. Top rivals, similar Walmart's Sam's Club and BJ's Wholesale Club, don't person this benignant of stellar way record. It points to the durable request that Costco faces, which supports higher ft postulation and summons sizes.

During the archetypal 4th of fiscal 2025 (ended Nov. 24, 2024), the institution raked successful $61 cardinal successful nett sales. This monolithic sum makes Costco the world's third-biggest retailer, and gives it a almighty standard advantage.

The emblematic Costco warehouse carries 4,000 stock-keeping units, acold less than different supermarkets. It buys immense quantities of merchandise from its suppliers, which results successful bargaining power. Favorable input costs pb to little prices for customers. It's a positive feedback loop that's hard to dilatory down.

High-quality goods and little prices should beryllium capable to delight customers. However, Costco has figured retired a mode to thrust repetition acquisition behaviour and loyalty. Its shoppers indispensable wage yearly fees to beryllium members and person the close to sojourn its warehouses. Membership interest income totaled $4.8 cardinal successful fiscal 2024.

Home Depot isn't connected arsenic beardown a footing arsenic Costco. In the fiscal 2024 4th fourth (ended Feb. 2, 2024), the concern reported conscionable a 0.8% emergence successful SSS. On the positive, this was the archetypal summation aft Home Depot posted 8 consecutive quarterly declines. CEO Ted Decker continues to constituent to "uncertain macroeconomic conditions successful a higher involvement complaint situation that impacted location betterment demand."

Hopefully, the concern volition amended soon, arsenic the outlook calls for 1% SSS maturation successful fiscal 2025. However, the strategy of improving the lawsuit experience, driving greater spending from professionals, and opening caller stores hasn't changed.