Billionaires Are Selling Costco. These 2 Retail Stocks Are Better Buys.

Costco Valuation and Performance - Costco's stock has surged over 600% in the past decade, driven by new store openings, same-store sales growth, and e-commerce expansion [1] - The stock is considered overvalued with a P/E ratio of 56, double that of the S&P 500 index [1] - Billionaire investors, including Ray Dalio's Bridgewater Associates and Ken Griffin's Citadel Capital, have been selling Costco shares in Q2, indicating concerns over stretched valuation [1][2] Home Depot Analysis - Home Depot is the largest home improvement retailer in the US, but its stock has struggled due to the housing market slowdown and remains below its 2021 peak [3] - The Federal Reserve's rate-cutting cycle, including a 50 basis point reduction, is expected to boost the housing market and home improvement projects, benefiting Home Depot [3] - Home Depot's acquisition of SRS Distribution expands its addressable market by $50 billion and strengthens its vertical integration [4][5] - The stock trades at a P/E ratio of 27, with earnings growth expected to rebound as the housing market recovers [5] Target Analysis - Target has faced challenges from slowing consumer spending and internal issues like theft, but recent improvements in gross margin (27% to 28.9%) and operating margin (4.8% to 6.4%) indicate a positive turnaround [6] - Falling interest rates and controlled inflation are expected to encourage consumer spending, further supporting Target's recovery [6] - Target continues to open new stores and leverages competitive advantages such as its multicategory business model, store-based fulfillment, and curbside pickup program [7] - With a P/E ratio of 16 and expected earnings growth comparable to Costco, Target is seen as a more attractive investment compared to Costco [7]