Walmart vs. Costco: What's the Better Retail Stock to Buy Right Now?

Core Insights - Over the past decade, Walmart and Costco stocks have surged more than 460%, demonstrating their resilience in challenging economic conditions [1] - Both companies have more than doubled in value over the past five years, but this has made them more expensive investments [2] Company Performance - Costco has experienced solid growth, benefiting significantly during periods of strong consumer spending, but its growth rate has recently fallen to single digits, aligning more closely with Walmart's growth [2] - Walmart is planning to expand domestically by opening or expanding up to 150 stores in the U.S. over the next five years and has completed the acquisition of TV-maker Vizio, which may enhance its advertising business [5] Market Valuation - Walmart's current market cap is $896 billion, with a gross margin of 25.87% and a dividend yield of 0.81% [6][7] - Costco's market cap stands at $409 billion, with a gross margin of 12.84% and a dividend yield of 0.55% [10][11] - Historically, Costco has traded at a higher price-to-earnings multiple than Walmart, and this gap has widened recently, raising questions about the justification for its premium valuation [9] Investment Considerations - Despite Costco's strong brand and growth opportunities, its high valuation at around 50 times earnings may pose risks for investors, especially with its growth rate now in single digits [11][13] - Walmart, while not cheap, offers a more reasonable valuation compared to Costco, providing a better margin of safety for investors [12][14]