Costco Wholesale Corporation, together with its subsidiaries, engages in the operation of membership warehouses in the United States, Puerto Rico, Canada, Mexico, Japan, the United Kingdom, Korea, Australia, Taiwan, China, Spain, France, Iceland, New Zealand, and Sweden. The company offers branded and private-label products in a range of merchandise categories. It offers merchandise, such as sundries, dry groceries, candies, coolers, freezers, deli, liquor, and tobacco; appliances, electronics, health and beauty aids, hardware, garden and patio products, sporting goods, tires, toys and seasonal products, office supplies, automotive care products, postages, tickets, apparel, small appliances, furniture, domestics, housewares, special order kiosks, and jewelry; and meat, produce, service deli, and bakery products. The company also operates gasoline, pharmacies, optical, food courts, hearing-aid centers, and tire installation centers; and offers business delivery, travel, grocery, and various other services online. It also operates e-commerce websites. The company was formerly known as Costco Companies, Inc. and changed its name to Costco Wholesale Corporation in August 1999. Costco Wholesale Corporation was founded in 1976 and is based in Issaquah, Washington.

Costco Wholesale Corporation

Key Points
Costco’s membership fees essentially cover all operating expenses, giving it pricing power competitors can’t match.
Renewal rates above 90% underpinned by a loyalty flywheel that's next to impossible to replicate.
Even at a premium valuation, Costco’s steady double-digit growth and fortress-like business model justify the price.
Costco (NASDAQ: COST) isn't just a retailer -- it's a phenomenon. From $1.50 hot dogs to cavernous warehouses and famously cheap rotisserie chickens, Costco has built an almost cult-like following in North America.
The company's unique business model has allowed it to thrive in an industry known for razor-thin margins and price-sensitive shoppers.
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Membership first, margin later
Costco's real secret weapon isn't on the shelves. The firepower lies in its membership model.
Customers pay $65 annually for a basic membership or $130 for an executive membership , which comes with extra rewards. As of the last quarter, the company had more than 81 million paid memberships -- driving $5.3 billion of revenue in the fiscal year (ending on August 31, 2025).
Membership revenue isn't just a nice bonus. It covers about one-fifth of overhead expenses, allowing the company to sell products at lower gross margins on a unit-basis.
That's why shoppers can consistently find prices that competitors can't match, and why Costco doesn't rely on high markups to generate profits.
An irreplaceable loyalty engine
Memberships are not only plentiful and growing, but they are sticky too.
Costco's renewal rates are extraordinary. Around 90% of members renew every year globally , and the rate is even higher in the U.S. This creates a virtuous cycle:
Low prices bring in shoppers.
Shoppers are happy and renew their memberships.
Renewals give Costco scale.
Scale allows for even lower prices.
Rinse and repeat.
Once customers are in the Costco ecosystem, they tend to stay. It's difficult for competitors to replicate this flywheel because it's built on decades of trust, scale, and consistent execution, not flashy marketing.
A long runway for growth
Even though Costco already operates 890 warehouses worldwide, it's not slowing down. Management expects to increase that number to 914 by the end of fiscal 2025 and to 944 by fiscal 2026 (six percent growth).
This disciplined expansion strategy focuses on high-return locations rather than aggressive, margin-eroding growth.
Strong financial foundation
Costco's financial results reflect its steady, reliable model. Last year, the company generated $275 billion in revenue (+8% y/y) and $8.1 billion in net income (+10% y/y), while producing $7.8 billion in operating free cash flow . Return on invested capital is a robust +20%, and has been steadily increasing; showing that the company doesn't just grow--it grows efficiently.
Again, the $5.3 billion membership fees last year are almost pure profit and are what make Costco's thin-margin retail operations sustainable, turning what would be a low-margin store model into a cash machine.
Valuation reflects its quality
The stock trades at about 46× forward earnings , which is expensive compared to most retailers, like Walmart (NYSE: WMT) at 34x, BJ's Wholesale Club (NYSE: BJ) at 19x and Target (NYSE: TGT) at just 11x.
But Costco has earned that premium. Earnings have grown at an average of +10% for years , and the company's high renewal rates and expansion plans make that growth stronger more predictable than most in the sector. For example, Target has seen its revenues flat-line and earnings trend down in the last three years.
Over the past decade, Costco's stock has appreciated more than 500% , rewarding long-term investors handsomely.
If the company keeps executing, there's no issue with it continuing to grow earnings into its valuation. At a 10% earnings growth rate, the P/E goes from 46x to 29x within five years.
Risks and resilience
A pullback in consumer spending is always a risk in retail, but Costco tends to shine when times get tough. Shoppers often trade down to its bulk bargains, keeping sales steady even when others struggle.
That said, inflation and currency swings can pressure margins, especially if Costco holds prices low to protect its value reputation.
Costco's model is rooted in its consistency. Membership fees make up most of its profit, giving it a steady income stream that cushions against volatility. It's a simple formula -- low prices, loyal members, and reliable recurring revenue -- but it's proven to work in good times and bad.
However, in my mind the sharpest risk stems from the company's reliance on membership revenues. While renewal rates hover above 90%, a prolonged slowdown could deal a double whammy of less membership fee revenue and fewer physical sales.
This doesn't seem to be showing any sign of slowing anytime soon though.
The Foolish bottom line
Costco has built a retail fortress powered by membership loyalty and unmatched value. Its model flips the traditional retail profit equation: instead of squeezing margins on goods, it wins with recurring membership revenue.
For long-term investors, Costco offers a rare mix of growth, resilience, and customer devotion that few competitors can match.
In a world where most retailers fight for thin margins and fleeting traffic, Costco's unique and cult-like membership model, relentless focus on value and enormous scale have poured the foundation for a sustainable competitive advantage for years to come.
Should you invest $1,000 in Costco Wholesale right now?
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

How a $5 Rotisserie Chicken and a $65 Membership Are Powering an Unstoppable Retail Juggernaut

Below is Validea's guru fundamental report for COSTCO WHOLESALE CORP (COST). Of the 22 guru strategies we follow, COST rates highest using our Patient Investor model based on the published strategy of Warren Buffett. This strategy seeks out firms with long-term, predictable profitability and low debt that trade at reasonable valuations.
COSTCO WHOLESALE CORP (COST) is a large-cap growth stock in the Retail (Specialty) industry. The rating using this strategy is 79% based on the firm’s underlying fundamentals and the stock’s valuation. A score of 80% or above typically indicates that the strategy has some interest in the stock and a score above 90% typically indicates strong interest.
The following table summarizes whether the stock meets each of this strategy's tests. Not all criteria in the below table receive equal weighting or are independent, but the table provides a brief overview of the strong and weak points of the security in the context of the strategy's criteria.
Detailed Analysis of COSTCO WHOLESALE CORP
More Information on Warren Buffett
About Warren Buffett: Warren Buffett is considered by many to be the greatest investor of all time. As the chairman of Berkshire Hathaway, Buffett has consistently outperformed the S&P 500 for decades, and in the process has become one of the world's richest men. (Forbes puts his net worth at $37 billion.) Despite his fortune, Buffett is known for living a modest lifestyle, by billionaire standards. His primary residence remains the gray stucco Nebraska home he purchased for $31,500 nearly 50 years ago, according to Forbes, and his folksy Midwestern manner and penchant for simple pleasures -- a cherry Coke, a good burger, and a good book are all near the top of the list -- have been well-documented.
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COST Quantitative Stock Analysis - Warren Buffett

Key Points
Sold 79,802 shares of Marsh & McLennan Companies; estimated trade value ~$16.41 million
The sale represents 2.23% of CADINHA & CO LLC’s 13F reportable AUM as of Q3 2025.
Post-trade position: 2,925 shares valued at $589,475 as of September 30, 2025
The position now represents 0.08% of AUM, placing it outside the fund’s top five holdings
Image source: Getty Images
CADINHA & CO LLC reduced its stake in Marsh & McLennan Companies (NYSE:MMC), selling shares worth an estimated $16.41 million based on the average price for Q3 2025, according to an SEC filing dated October 16, 2025.
What happened
According to a filing with the U.S. Securities and Exchange Commission on October 16, 2025, CADINHA & CO LLC sold 79,802 shares of Marsh & McLennan Companies during the quarter. The estimated value of the shares sold was $16.41 million, calculated using the period’s average unadjusted closing price. The fund held 2,925 shares of Marsh & McLennan Companies at quarter-end.
What else to know
The sale reduced Marsh & McLennan Companies’ weight in the portfolio to 0.08% of 13F AUM, outside the fund’s top five holdings.
Top holdings after the filing:
BRK-B: $38.86 million (5.28% of AUM) as of September 30, 2025
IAU: $38.47 million (5.2% of AUM) as of September 30, 2025
COST: $35.68 million (4.8% of AUM) as of September 30, 2025
MSFT: $35.17 million (4.8% of AUM) as of September 30, 2025
GOOGL: $34.87 million (4.7% of AUM) as of September 30, 2025
As of October 16, 2025, shares of Marsh & McLennan Companies were priced at $186.48, down 18.18% over the past year, underperforming the S&P 500 by 30.19 percentage points over the past year.
Company Overview
Revenue (TTM)
$26.45 billion
Net Income (TTM)
$4.13 billion
Dividend Yield
1.82%
Price (as of market close 2025-10-16)
$186.48
Company Snapshot
Marsh & McLennan Companies, Inc. is a global leader in professional services, specializing in risk, insurance, and consulting solutions. With a diversified business model, the company leverages its scale and expertise to deliver value-added services to a broad base of institutional and corporate clients. Its competitive advantage is rooted in its longstanding industry presence and comprehensive suite of advisory offerings.
The company generates revenue primarily through service fees, commissions from insurance broking, and consulting engagements for corporate and institutional clients.
Marsh & McLennan Companies, Inc. serves businesses, public entities, insurance companies, associations, and professional services organizations worldwide.
Foolish take
CADINHA & CO's recent sale of Marsh & McLennan stock reflects a broader trend of investors growing cautious and consulting firms as market conditions shift. For Marsh & McLennan, though, rising uncertainties are not a setback. It is the foundation of its business, and the company continues to find ways to turn that uncertainty into opportunity.
Marsh & McLennan's product offering isn't focused directly on selling insurance, and it is more heavily centered on its consulting services. The firm earns fees and commissions for placing coverage, arranging reinsurance, and advising on strategy and risk management.
Its portfolio is broader than many realize. Through its Marsh brokerage arm and Guy Carpenter reinsurance division, the company connects clients to insurance capacity worldwide, while Mercer and Oliver Wyman extend the relationship into workforce and strategy consulting. Each division reinforces the other and creates a self-sustaining loop of data and advisory demand that strengthens the company's moat.
For long-term investors, the lens is simple. As cyber threats and climate shocks grow more prevalent, more companies need help measuring exposure and negotiating protection. That type of work relies heavily on data, credibility, and global reach. Those are all strengths that have made the firm a trusted leader for decades. Marsh & McLennan's expertise will only become more valuable in a world where global risk grows more complex and becomes a permanent feature of the global economy.
Glossary
13F reportable AUM: Assets under management reported by institutional investment managers on SEC Form 13F, typically covering U.S. equity holdings.
AUM (Assets Under Management): The total market value of investments managed on behalf of clients by a fund or firm.
Quarter-end: The last day of a financial quarter, used as a reference point for reporting holdings and performance.
Portfolio weight: The percentage of a portfolio's total value allocated to a specific investment or holding.
Top holdings: The largest investments in a portfolio, usually ranked by market value or portfolio weight.
Reinsurance broking: The service of arranging insurance for insurance companies, helping them transfer risk to other insurers.
Consulting engagements: Professional advisory projects where firms provide expertise and recommendations to clients for a fee.
Institutional clients: Organizations such as corporations, pension funds, or governments that invest large sums, as opposed to individual investors.
Service fees: Charges paid by clients for professional services, separate from commissions or product sales.
TTM: The 12-month period ending with the most recent quarterly report.
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Eric Trie has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Costco Wholesale, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Marsh & McLennan Turns Global Risk Into Long-Term Growth

Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the ProShares UltraPro QQQ (Symbol: TQQQ) where we have detected an approximate $840.3 million dollar outflow -- that's a 2.8% decrease week over week (from 273,750,000 to 266,150,000). Among the largest underlying components of TQQQ, in trading today Netflix Inc (Symbol: NFLX) is trading flat, Costco Wholesale Corp (Symbol: COST) is down about 0.5%, and T-Mobile US Inc (Symbol: TMUS) is lower by about 0.6%. For a complete list of holdings, visit the TQQQ Holdings page » The chart below shows the one year price performance of TQQQ, versus its 200 day moving average:
Looking at the chart above, TQQQ's low point in its 52 week range is $35 per share, with $115.2899 as the 52 week high point — that compares with a last trade of $114.89. Comparing the most recent share price to the 200 day moving average can also be a useful technical analysis technique -- learn more about the 200 day moving average ».
Exchange traded funds (ETFs) trade just like stocks, but instead of ''shares'' investors are actually buying and selling ''units''. These ''units'' can be traded back and forth just like stocks, but can also be created or destroyed to accommodate investor demand. Each week we monitor the week-over-week change in shares outstanding data, to keep a lookout for those ETFs experiencing notable inflows (many new units created) or outflows (many old units destroyed). Creation of new units will mean the underlying holdings of the ETF need to be purchased, while destruction of units involves selling underlying holdings, so large flows can also impact the individual components held within ETFs.
Also see:
Monthly Dividend Paying Stocks
SPI Options Chain
Institutional Holders of NAMM
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Noteworthy ETF Outflows: TQQQ, NFLX, COST, TMUS

Costco Wholesale Corporation’s COST core membership model faced a slight hiccup in the final quarter of fiscal 2025, with the worldwide renewal rate easing to 89.8% from 90.2% in the preceding quarter. U.S. and Canada membership renewal rate stood at 92.3%, down 40 basis points on a sequential basis. This figure is a marginal step down from previous high-water marks and raises the question of whether this is a temporary blip or a signal of market saturation.
The decline, attributed to a rising share of online sign-ups, follows a surge in digital membership growth, including a large Groupon campaign in December 2023 that introduced younger members to the brand. While management emphasized that online members renew at slightly lower rates, it also views this trend as a positive evolution that expands Costco’s reach to a new demographic.
Nearly half of new members are now under 40, signaling an important generational turnover within the company’s member base. Costco’s challenge will be to engage these digital-first shoppers effectively through auto-renewal programs and targeted communication that deepens brand loyalty beyond initial discounts.
The renewal rate remains historically strong but could see minor pressure as the new mix of online members continues to flow through the system. Management expects this dynamic to persist for a few quarters before stabilizing. For a company known for decades of consistency in membership metrics, the shift underscores a new balancing act between digital expansion and retention discipline.
The question now is whether Costco’s push into online acquisition marks a temporary dip in loyalty or the beginning of a redefined membership model in the digital era. Costco reported a 14% year-over-year increase in membership fee income during the fourth quarter of fiscal 2025, reaching $1,724 million.
Walmart & BJ’s Wholesale Snapshot on Membership Income
Walmart Inc. WMT is leaning heavily into membership economics as Walmart+ and Sam’s Club continue to deliver outsized growth. In the second quarter of fiscal 2026, Walmart reported a 15.3% surge in global membership fee income, outpacing overall sales growth. Walmart+ delivered double-digit growth in fee income, while Sam’s Club posted a 7.6% rise fueled by higher Plus member penetration. Management emphasized that Walmart’s membership strength is now a critical profit lever alongside advertising and e-commerce, giving Walmart the flexibility to offset rising costs and reinforce its price leadership.
BJ's Wholesale Club Holdings, Inc. BJ is also showing notable traction in membership fees, supported by its digital ecosystem. BJ’s Wholesale posted record membership income of $123.3 million in the second quarter of fiscal 2025, up 9% from last year, with total membership reaching 8 million. BJ’s Wholesale noted that digitally engaged members are twice as valuable as in-club-only shoppers, underscoring how technology integration and higher-tier penetration, now at 41%, are fueling loyalty and retention.
What the Latest Metrics Say About Costco
Costco stock has risen 4.7% over the past year, underperforming the industry’s growth of 6.9%.
Image Source: Zacks Investment Research
From a valuation standpoint, Costco's forward 12-month price-to-earnings ratio stands at 46.02, higher than the industry’s ratio of 29.94. COST carries a Value Score of D.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Costco’s current financial-year sales and earnings per share implies year-over-year growth of 7.7% and 11%, respectively.
Image Source: Zacks Investment Research
Costco currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Beyond Nvidia: AI's Second Wave Is Here
The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. Little-known AI firms tackling the world's biggest problems may be more lucrative in the coming months and years.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Costco's Renewal Rate Slips to 89.8%: Temporary Dip or New Normal?

Sprouts Farmers Market, Inc. SFM and Costco Wholesale Corporation COST may differ in scale and strategy, but both are key players in the retail landscape. SFM, with a market capitalization of approximately $10.4 billion and more than 450 stores, specializes in fresh, natural and organic foods tailored to health-conscious consumers.
On the other hand, Costco boasts a substantial market capitalization of approximately $413.1 billion, operating on a membership-based warehouse model that focuses on selling bulk goods at discounted prices across various categories, including groceries, electronics and household essentials. Its network spans 914 warehouses worldwide, including 629 in the United States and Puerto Rico and 110 in Canada.
Both companies are navigating an evolving retail landscape characterized by inflation, shifting consumer values, and a greater focus on affordability and quality. While Sprouts Farmers emphasizes curated assortments and disciplined expansion within its niche, Costco leverages its scale, pricing power and loyal member base to drive steady traffic. Let’s dive deep into the stocks to determine which stands out as the better bet today.
The Case for Sprouts Farmers
Sprouts Farmers continues to carve out a strong position in the grocery sector, delivering fresh, natural and health-oriented foods. The company’s focus on quality produce and wellness-driven assortments aligns seamlessly with the growing consumer shift toward healthier eating habits. A major driver of this success is the company’s curated product mix and private-label strategy.
SFM’s expanding in-house brand portfolio offers shoppers high-quality alternatives at attractive prices, while supporting higher margins and brand loyalty. The emphasis on organic and nutrient-rich offerings has further strengthened its leadership among health-conscious consumers, a demographic that continues to expand faster than the broader grocery market. The company continues to introduce new private-label and high-protein products, catering to evolving nutritional preferences and protein-focused diets.
This ongoing diversification enhances both customer engagement and category growth potential. We expect comparable-store sales growth of 7.6% in the third quarter, marking a moderation from 10.2% and 11.7% growth reported in the second and first quarters, respectively. Management had earlier flagged this deceleration, primarily due to cycling against a stronger comparison base from late 2024. While the pace of growth is normalizing, traffic trends remain encouraging, underscoring continued consumer interest in Sprouts Farmers’ differentiated offering.
On its second-quarterearnings call management hinted that both the gross margin and SG&A rate would begin to normalize starting in the third quarter, reflecting comparisons against the prior year’s improved shrink performance. We expect a 20-basis-point gross margin expansion for the quarter, reflecting a softer rate of improvement compared with the first half of the year. Meanwhile, SG&A expenses are projected to rise 14.4% year over year, though as a percentage of net sales, they are expected to leverage 10 basis points to 29.7%. These expectations point to a healthy balance between growth investments and margin discipline as the company navigates cost normalization.
Digital transformation has also emerged as a key growth catalyst. The company’s e-commerce platform and partnerships with major delivery providers like Instacart, DoorDash and Uber Eats have made online shopping more seamless and accessible. Meanwhile, its loyalty program, Sprouts Rewards, is showing promising results in driving repeat purchases and boosting customer spending. Early test outcomes indicate that engaged members are shopping more frequently and filling larger baskets — a sign of deepening brand connection.
The Case for Costco
Costco’s resilient business model, built around its membership-based structure, continues to be a key growth driver. Healthy membership renewal rates — 92.3% in the United States and Canada and 89.8% worldwide — along with efficient supply-chain operations and bulk purchasing power, enable Costco to offer competitive prices that foster customer loyalty. This strong model has helped Costco succeed, even during economic downturns.
Members pay an annual fee for access to Costco’s warehouses, where they enjoy substantial discounts on a wide range of products. This system not only ensures a steady revenue stream but also creates a sense of value and exclusivity. In the fourth quarter of fiscal 2025, membership fee income increased 14% year over year, supported by fee increases introduced last year in September in the United States and Canada. The company ended the quarter with 81 million paid household members, a 6.3% rise from the previous year.
Costco continually adapts to market trends and consumer preferences. The company frequently updates its product lineup to include a mix of everyday essentials and unique, high-demand items. Through market analysis and customized offerings, Costco has expanded its presence both domestically and internationally. In fiscal 2026, the company plans to open 35 new locations (including five relocations).
Digitization also plays a key role in Costco’s expansion. E-commerce performance was strong, with comparable sales rising 13.6% year over year. E-commerce site traffic was up 27%, and Costco Logistics deliveries rose 13% in the quarter. Management also highlighted that “digitally enabled” sales (a broader measure that will be reported going forward) totaled more than $27 billion in fiscal 2025. For the five weeks ended Oct. 5, 2025, digitally-enabled comparable sales surged 26.1%
This robust operational performance translated into strong financial results. Costco generated $13,335 million of operating cash flow in fiscal 2025 and concluded the year with $14,161 million in cash and equivalents. Management invested nearly $5,498 million in capital expenditures during the fiscal year and signaled that fiscal 2026 capex would grow modestly above last year to support planned warehouse openings.
SFM vs. COST: How Do Estimates Stack Up?
The Zacks Consensus Estimate for Sprouts Farmers’ current financial-year sales and EPS implies year-over-year growth of 15.5% and 41.9%, respectively. The consensus estimate for EPS for the current fiscal year has been stable at $5.32 over the past 30 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Costco’s current fiscal-year sales and EPS calls for year-over-year growth of 7.7% and 11%, respectively. The consensus estimate for EPS for the current fiscal year has risen by 11 cents to $19.97 over the past 30 days.
Image Source: Zacks Investment Research
SFM vs. COST: A Look at YTD Stock Performance
Shares of Sprouts Farmers have declined 11.6% over the past year against Costco’s modest gain of 4.6%.
Image Source: Zacks Investment Research
SFM vs. COST: Stock Valuation
Sprouts Farmers is trading at a forward 12-month price-to-earnings (P/E) ratio of 18.29, below its one-year median of 30.84. Meanwhile, Costco’s forward P/E ratio stands at 46.02, below its median of 50.40.
Image Source: Zacks Investment Research
SFM vs. COST: Which Is a Better Bet Now?
Costco currently stands out as the stronger play for investors. Its membership-based model, scale efficiencies and consistent renewal rates provide exceptional earnings visibility and resilience across economic cycles. The company’s expanding digital ecosystem and disciplined global expansion strategy further enhance its growth durability. By contrast, Sprouts Farmers remains a promising niche player benefiting from health-driven consumer trends, but its growth trajectory is moderating after a strong run, leaving it more exposed to competitive and macro pressures. For now, Costco’s breadth, stability and operational consistency make it the more compelling investment choice. Costco carries a Zacks Rank #3 (Hold), while Spouts Farmers has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Beyond Nvidia: AI's Second Wave Is Here
The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. Little-known AI firms tackling the world's biggest problems may be more lucrative in the coming months and years.
See "2nd Wave" AI stocks now >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Sprouts Farmers vs. Costco: Which Retail Stock Is the Stronger Play?

Key Points
IBM trades at a fraction of Microsoft's and Nvidia's valuations despite leading positions in quantum computing and AI.
American Express continues its streak of beating analyst expectations while embracing blockchain and AI technologies.
Walmart is successfully borrowing strategies from Amazon and Costco while leveraging its massive physical footprint.
The Dow Jones Industrial Average (DJINDICES: ^DJI) market index is an elite club. Its 30 components are some of the best businesses in America, hand-picked and maintained by the five financial experts on S&P Global's Averages Committee.
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The Dow members jumped through many hoops to reach that lofty position, and most of them should be solid investments in any economy. The well-known "Dogs of the Dow" investing strategy even looks for Dow stocks trading at a discount, with the assumption that these giants will recover from short-term problems. It's not an infallible strategy, but still a famous and theoretically reasonable one.
But there are different levels of excellence even in this top-shelf group. Three of the current Dow stocks strike me as no-brainer buys right now.
1. IBM
Quantum computing and artificial intelligence (AI) are two of the hottest business trends on the planet right now. IBM (NYSE: IBM) is a leading player in both fields, but Big Blue's stock is lagging behind other quantum and AI winners.
I mean, the market is starting to catch on. IBM's stock gained 29% year-to-date as of this writing on Oct. 23. But it still looks undervalued trading at 4.0 times sales and 23.4 times forward earnings estimates.
Last week's earnings report underscored IBM's AI and quantum computing muscle. AI-based contracts rose to $9.5 billion, up from $7.5 billion three months earlier. On theearnings call IBM management celebrated technical advances in the quantum arena, targeting 2028 for the first error-corrected quantum computer.
And you can invest in IBM's thrilling technology at a deep discount. Fellow Dow members Microsoft (NASDAQ: MSFT) and Nvidia (NASDAQ: NVDA) also offer exposure to the AI and quantum computing trends, but their stocks are quite expensive. Microsoft trades at 11.3 times sales, while Nvidia's shares change hands at 44.3 times sales. IBM's price-to-sales ratio of 4.0 is a downright steal.
2. American Express
I don't get excited about bank stocks and financial services too often, but American Express (NYSE: AXP) makes the grade nowadays.
This longtime Warren Buffett favorite keeps beating analyst expectations, often with double-digit percentage growth on the top line and even stronger earnings gains. But it's more than just another boring bank-like success story.
American Express has always focused on customer service and unique card features. The legacy continues in 2025 as the company highlighted AI adoption among small businesses, added a substantial Squarespace credit to its business-class Gold card, and shipped a brand-new travel app built on the Ethereum (CRYPTO: ETH) blockchain.
There's nothing boring or old-school about American Express, despite its centennial history and Warren Buffett's deep-value stamp of approval. The stock is neither cheap nor too expensive, but it's a no-brainer investment with share prices in the Goldilocks zone. If American Express keeps up its winning ways and next-gen technology development, the premium prices should come later.
3. Walmart
And if you thought American Express was an unexpected guest on this list, the third name might downright shock you.
Good old Walmart (NYSE: WMT) is evolving before my eyes. The world's largest big-box retailer is borrowing entire chapters from the playbooks of Amazon (NASDAQ: AMZN) and Costco Wholesale (NASDAQ: COST), building its own take on e-commerce with a massive physical footprint.
In August's second-quarter report, Walmart's online orders grew 25% year over year. The shipping service is catching up to Amazon Prime's benefits in many ways, providing same-day delivery for paying members of the Walmart+ club. Like Costco's memberships and Amazon Prime's subscriptions, Walmart's customer loyalty program represents a low-cost stream of pure bonus revenue.
Here's one last surprise: Walmart stock comes with a premium price tag today.
The stock trades at 36 times forward earnings estimates, which is a lofty valuation for a business that redefined low-cost retail operations. Investors have noticed that Walmart is up to a whole bunch of new tricks, setting the stock up for great long-term returns. So the rich stock price makes sense, and it's a no-brainer buy right now.
Should you invest $1,000 in International Business Machines right now?
Before you buy stock in International Business Machines, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and International Business Machines wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $590,357!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,141,748!*
Now, it’s worth noting Stock Advisor’s total average return is 1,033% — a market-crushing outperformance compared to 193% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
*Stock Advisor returns as of October 20, 2025
American Express is an advertising partner of Motley Fool Money. Anders Bylund has positions in Amazon, Ethereum, International Business Machines, Nvidia, and Walmart. The Motley Fool has positions in and recommends Amazon, Costco Wholesale, Ethereum, International Business Machines, Microsoft, Nvidia, S&P Global, and Walmart. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

3 No-Brainer Dow Jones Stocks to Buy Right Now

Key Points
Costco is a club store retailer with a strongly performing business.
Agree Realty is a net lease retail landlord that has been growing its business.
Both are being afforded premium prices, but Agree's valuation looks a lot more reasonable.
At first glance, it seems like Costco (NASDAQ: COST) and Agree Realty (NYSE: ADC) would be an apples-to-oranges comparison. In some ways, that's true.
But the link is that Agree's business is leasing out properties to what it hopes are well-run retailers, which is what Costco happens to be.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
Here's why you might want to go with one over the other.
Retailers versus landlords
Consumers are incredibly fickle. They shift from store concept to store concept based on things like fashion trends and economic activity. There's a huge amount of risk when you buy a retailer because you are betting on one company's success when people could easily move on to a different retail concept. It's why some investors prefer to own retail landlords instead.
It isn't that landlords, like real estate investment trusts (REITs), don't care who leases their properties. A bad tenant can, indeed, create financial problems for a REIT. But most REITs have more than one tenant, diversifying the risk caused by any one troubled tenant. The property that a REIT owns also has intrinsic value. It can be sold or leased again if needed. Instead of trying to pick a retail winner, you can just focus on a REIT with good properties.
This is the basic comparison when looking at Costco and Agree. But there's a slight twist here, because both are growth-oriented businesses, and valuation-wise, both are at least a little on the expensive side.
Costco is excelling, and Agree is a speedy tortoise
Costco is a club store. That means customers pay a membership fee for the privilege of shopping in one of the company's stores. Those membership fees are an annuity-like income stream that helps Costco better compete with other retailers. Essentially, it can afford to accept lower margins, which keeps product costs low for customers. While the selection in the stores is limited, that hasn't stopped the company from growing steadily for years.
Investors have noticed Costco's success. The stock is up 500% over the past decade. The dividend yield is currently around 0.6%, which is near the lowest levels of the past 10 years. That said, Costco has never been a particularly high-yielding stock. Its five-year average yield is 0.8%. Still, the yield is low on both an absolute and relative level, compared to its own history.
Agree's business model is, essentially, to buy new buildings so it can grow its portfolio. That, in turn, allows it to pass a growing income stream on to shareholders in the form of dividends.
REITs are specifically designed to pay dividends. The company has grown its portfolio pretty steadily over the past decade, leading investors to reward it with a 130% share price increase. But the yield is around 4.2%, which is actually higher than the stock's 10-year average yield and roughly middle-of-the-road for the REIT. It looks far more reasonably priced and offers a materially higher income stream than Costco.
What are you looking to achieve?
Costco is a very well-run retailer, but Wall Street knows it. While the stock has pulled back a little more than 10% from its recent highs, it isn't cheap by any stretch of the imagination. You need to believe that the company's store concept will continue to resonate well if you're going to buy Costco shares. That's not unreasonable given the success the company has achieved, but given the tiny yield, you're counting on further stock price appreciation to drive your returns.
Agree Realty is a more diverse growth story in the retail space because it isn't a bet on a single store concept. It trades at a premium to peers. In comparison, Realty Income (NYSE: O), the largest competitor in the space, has a yield of 5.4%. However, Agree's 4.2% yield looks reasonably priced compared to its own history. If you don't want to take on the idiosyncratic risk of owning a single retail concept, Agree looks like it could be a more attractive choice than Costco.
Should you invest $1,000 in Costco Wholesale right now?
Before you buy stock in Costco Wholesale, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Costco Wholesale wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $590,357!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,141,380!*
Now, it’s worth noting Stock Advisor’s total average return is 1,033% — a market-crushing outperformance compared to 193% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
*Stock Advisor returns as of October 20, 2025
Reuben Gregg Brewer has positions in Realty Income. The Motley Fool has positions in and recommends Costco Wholesale and Realty Income. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Best Stock to Buy Right Now: Costco vs. Agree

Looking at options trading activity among components of the Russell 3000 index, there is noteworthy activity today in Boeing Co. (Symbol: BA), where a total volume of 84,279 contracts has been traded thus far today, a contract volume which is representative of approximately 8.4 million underlying shares (given that every 1 contract represents 100 underlying shares). That number works out to 108.4% of BA's average daily trading volume over the past month, of 7.8 million shares. Especially high volume was seen for the $220 strike call option expiring October 24, 2025, with 7,174 contracts trading so far today, representing approximately 717,400 underlying shares of BA. Below is a chart showing BA's trailing twelve month trading history, with the $220 strike highlighted in orange:
Costco Wholesale Corp (Symbol: COST) saw options trading volume of 28,184 contracts, representing approximately 2.8 million underlying shares or approximately 108.3% of COST's average daily trading volume over the past month, of 2.6 million shares. Especially high volume was seen for the $937.50 strike call option expiring October 24, 2025, with 833 contracts trading so far today, representing approximately 83,300 underlying shares of COST. Below is a chart showing COST's trailing twelve month trading history, with the $937.50 strike highlighted in orange:
And Snowflake Inc (Symbol: SNOW) options are showing a volume of 46,522 contracts thus far today. That number of contracts represents approximately 4.7 million underlying shares, working out to a sizeable 105.2% of SNOW's average daily trading volume over the past month, of 4.4 million shares. Particularly high volume was seen for the $260 strike call option expiring October 24, 2025, with 4,899 contracts trading so far today, representing approximately 489,900 underlying shares of SNOW. Below is a chart showing SNOW's trailing twelve month trading history, with the $260 strike highlighted in orange:
For the various different available expirations for BA options, COST options, or SNOW options, visit StockOptionsChannel.com.
Also see:
Institutional Holders of DOCN
ZIPR Historical Stock Prices
KRMD shares outstanding history
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Noteworthy Friday Option Activity: BA, COST, SNOW

Key Points
Costco has outperformed the market and many other Washington-based companies over the last five years.
The warehouse retailer has a powerful global brand and a solid growth history.
Costco's clear outperformance keeps the stock trading at premium valuations.
The last five years haven't been that stellar for a lot of Washington-based companies. Amazon, Boeing, and Starbucks have all lagged the S&P 500 by more than 60 percentage points over that span.
But one company based in Washington state has stood head and shoulders above the rest, not only crushing the S&P 500's return, but even outperforming Microsoft. Here's why outperformer Costco (NASDAQ: COST) could still be a no-brainer buy.
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Brand power
Even though Costco has been around much longer in Washington than it has in the rest of the world, its brand power is undisputed. One good way to gauge whether a business has staying power and brand influence is to ask: "If this business disappeared tomorrow, would anyone notice or care? Would anyone's lives be disrupted?"
For many retailers, the answer would be, "not really." A few grocery stores near me have gone out of business over the years, and while I certainly noticed the change ("Oh. I guess they're closed now"), I just ended up going to a different nearby grocery store. The same is true for many department stores, hardware stores, and the like. But the absence of Costco -- the third-largest retailer in the world behind Walmart and Amazon -- would be felt not just in Washington, but around the globe.
Costco's 136.8 million cardholders are located around the world, and only about half are in the U.S. Some of its best markets are surprising. For example, an estimated 71% of the population of Iceland are Costco members. (Who knew?) The company has such a major cultural profile that social media influencers A.J. and Big Justice (aka "the Costco guys") have amassed 2.8 million TikTok followers since their Costco videos began to go viral last year.
But Icelandic shoppers and social media influencers -- not to mention the company's 341,000 employees -- wouldn't be the only ones affected if Costco vanished: There would be serious global economic ramifications. For example, in 2015, when the company started sourcing most of its farmed salmon -- 300 tons per week -- from Norway instead of Chile, the decision caused ripples across the global fishing industry. That's a testament to Costco's brand power.
The value proposition
Because the stock has performed so well over the last five years -- it's up by more than 150%, not including dividends -- it's worth asking whether Costco is still a buy for investors. Does it have any more (attractively priced, members-only) gas left in the tank?
Well, the stock certainly doesn't look cheap right now, trading at a valuation of 52 times trailing earnings. That's way more expensive than most other retailers, like Target, which only has a price-to-earnings (P/E) ratio of 11. (Lower is better on P/E when you're buying.) Costco's P/E ratio has gradually gotten more expensive over the last five years, as its net income has "only" increased by 84%, much less than its share price growth. It now even exceeds Amazon's P/E of 33 and Walmart's ratio of 41.
Walmart and Costco likely owe their current high valuations to concerns about slackening U.S. consumer demand and expectations of further belt-tightening. While pullbacks in consumer spending are bad for the entire retail industry, retailers perceived as offering low prices or good value tend to fare better under such circumstances.
If we look at the price-to-free-cash-flow ratio -- another popular valuation metric for stock -- Costco's ratio of 54 looks attractive compared to Walmart's 63 or Amazon's 173. That's not to say that the stock is cheap, just that it's not the outlier that its P/E ratio might suggest.
Still a buy
Costco may once have been known only to Washington state residents, but the secret has been out for decades now: It's a well-run company with an excellent business model, and it has shown it can consistently grow revenue and earnings, attract new customers while retaining old ones, and increase its dividend payouts. Most companies with attributes like those command premium stock prices, and Costco is no exception. While Costco stock may not be the bargain it once was, it still looks poised to keep outperforming over the long term, which makes it a compelling home-state buy for Washingtonians.
Should you invest $1,000 in Costco Wholesale right now?
Before you buy stock in Costco Wholesale, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Costco Wholesale wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $600,550!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,116,616!*
Now, it’s worth noting Stock Advisor’s total average return is 1,032% — a market-crushing outperformance compared to 192% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.
*Stock Advisor returns as of October 20, 2025
John Bromels has positions in Amazon, Costco Wholesale, Microsoft, and Starbucks. The Motley Fool has positions in and recommends Amazon, Costco Wholesale, Microsoft, Starbucks, and Target. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Costco Wholesale Corporation

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