Better Stock to Buy Right Now: Costco vs. BJ's Wholesale

Core Viewpoint - The members-only discount store concept has gained significant popularity, leading to strong growth and record profitability for Costco Wholesale and BJ's Wholesale Club, with both companies' shares reaching all-time highs in 2023 [1]. Group 1: BJ's Wholesale Club - BJ's Wholesale Club has 7.5 million paying members and 247 club stores, which are significantly smaller than Costco's 76 million members and 891 locations [3]. - BJ's focuses on a strong regional presence, particularly in the eastern U.S., offering a greater variety of grocery items in smaller packages, appealing to everyday shoppers [4]. - In Q3, BJ's comparable club sales increased by 3.8% year-over-year, with adjusted EPS up 18%, surpassing Wall Street estimates [5]. - The company has seen a robust increase in memberships and store traffic, with digitally enabled comparable sales up 30% this year, indicating successful e-commerce investments [6]. - BJ's shares are trading at a forward P/E ratio of 24, representing a significant discount compared to Costco's forward P/E of 54, making it an attractive investment option [7][8]. Group 2: Costco Wholesale - Costco's net comparable sales increased by 6.5% year-over-year, outperforming BJ's growth rate, highlighting its size advantage and exposure to high-growth international markets [9]. - Costco offers a larger selection of premium and big-ticket items, positioning it well to capture a rebound in discretionary spending as borrowing costs decrease [10]. - Costco's brand recognition and industry leadership justify its higher valuation, despite its stock being considered expensive [11]. Group 3: Investment Decision - While Costco has strong growth trends, its stock is viewed as too expensive for immediate investment, whereas BJ's Wholesale appears to offer more value and better potential for shareholder rewards into 2025 and beyond [12].