Is Home Depot or Costco the Better Stock to Buy Right Now With $1,000?

Core Insights - Home Depot and Costco are both leading retailers in their respective sectors, generating significant annual revenues, but their stock performances differ, with Costco showing stronger growth [1][13]. Home Depot - Home Depot reported Q1 2025 revenue of $39.9 billion, a 9.4$1 trillion, with Home Depot holding a 16% market share, suggesting potential for growth by attracting customers from smaller competitors [5]. - The company highlights significant untapped home equity built up since the pandemic, which could lead to increased demand if macroeconomic conditions improve [6]. - Aging housing stock, with 55% of homes being 40 years or older, is expected to drive future revenue growth as older homes require more maintenance [7]. Costco - Costco continues to report positive SSS growth, demonstrating strong consumer demand even during economic downturns [9]. - The company benefits from a scale advantage, with $62.5 billion in net sales for Q2 2025, allowing it to negotiate favorable pricing with suppliers due to its limited product range [10]. - Costco's membership model fosters customer loyalty, with renewal rates exceeding 92$1.30 and occasional special dividends, the last being $15 in January 2024 [12]. - Over the past five years, Costco's stock price has increased by 236%, compared to Home Depot's 56%, indicating a market preference for Costco's financial performance [13]. Investment Considerations - Costco is viewed as the higher-quality business, but its shares trade at a price-to-earnings ratio of 59.9, significantly higher than Home Depot's 24.9 [13]. - For investors prioritizing company quality, Costco is recommended, while those focused on valuation may find Home Depot to be the better investment at present [14].