Better Growth Stock: Visa vs. Costco

Group 1 - Costco operates as a global retailer with a membership model, generating a steady income stream from membership fees, allowing for lower product margins and fostering customer loyalty through competitive pricing [2] - Visa functions as a payment processor, facilitating secure transactions between buyers and sellers, and has processed 257.5 billion transactions in fiscal 2025, benefiting from the ongoing shift from cash to card payments [3] Group 2 - Both Costco and Visa are expected to continue their growth trajectories, making them suitable candidates for growth-oriented investment portfolios, but valuation concerns must be addressed [4] - Costco's current price-to-sales (P/S) ratio is 1.5, above its five-year average of 1.2, with a price-to-earnings (P/E) ratio of 51 compared to a long-term average of 44, indicating a premium valuation [5] - Visa's P/S ratio stands at 18, slightly below its five-year average of 20, with a P/E ratio of 32 compared to a long-term average of 33, suggesting a more reasonable valuation relative to Costco [6]