Costco Wholesale Corporation

NASDAQ Global Select
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Bullish +75

The 2 Best Consumer Staples Stocks to Buy and Hold for Decades

AI-generated analysis

🛒 Consumer staples companies like Costco and Walmart offer safety due to selling essential goods regardless of market volatility.

📈 Costco reported a 92.1% U.S. member renewal rate for fiscal 2026 Q2, reflecting high customer loyalty driven by bulk deals and value pricing.

🚀 Costco is enhancing e-commerce through personalized recommendations based on search history and plans international warehouse expansions by year-end.

💻 Walmart operates nearly 11,000 locations and utilizes advanced delivery methods like drones and express options to reach customers directly.

📦 Walmart generates additional revenue streams through its Walmart+ membership program and advertising sales on digital platforms.

📉 Both retailers currently trade at high forward price-to-earnings ratios, which may present risks for conservative investors seeking pullbacks before buying.

⚖️ While recession-resistant in terms of business fundamentals, both stocks have recently declined slightly along with the broader market despite volatility resilience.

🤔 The author favors Walmart more due to its higher dividend yield, lower beta, and stronger potential for stock price appreciation linked to tech focus.

🏆 Costco Wholesale was excluded from The Motley Fool's current top 10 Stock Advisor list of recommended stocks for immediate investment.

📊 Historical data highlights The Motley Fool Stock Advisor's average return of 898% versus the S&P 500's 182%, though past performance does not guarantee future results.

🏢 Long-term investing suggests perfectly timing stock purchases matters less than the duration of holding for decade-long wealth accumulation.

Bullish Signals
  • Costco members maintain extremely high renewal rates with a 92.1% rate in the U.S. and Canada for fiscal 2026's second quarter ending Feb. 15, demonstrating strong loyalty despite economic uncertainties.
  • Costco has identified growth opportunities to expand its e-commerce capabilities by using members' search histories to personalize recommendations, which is already showing positive results.
  • Costco plans to strengthen its global brand presence and will expand warehouse operations in Canada and other international locations by the end of the year, offering steady revenue growth opportunities.
  • Walmart operates nearly 11,000 retail locations, providing broad market presence and stability essential for a recession-resistant investment strategy.
  • Walmart has successfully diversified its delivery options including drone delivery in select markets, express delivery, and three-hour delivery options, meeting consumers where they are.
  • Walmart is generating additional revenue streams by increasing its Walmart+ membership program, which provides consistent cash flow to supplement product sales.
  • Walmart is tapping into new revenue opportunities by selling advertising space on its digital platforms and in its stores, enhancing profitability potential.
  • The Motley Fool Stock Advisor team maintains a strong track record with an overall average return of 898%, significantly outperforming the S&P 500's 182% return, indicating confidence in recommended opportunities.
Risk Factors
  • Both Costco and Walmart are trading at what may be considered rich forward price-to-earnings ratios, posing a valuation risk that could lead to stock price pullbacks for conservative investors.
  • Even as recession-resistant companies, shares of both retailers have dropped over the last five days, showing that volatility can still negatively impact their stock prices during economic uncertainty.
  • The Motley Fool Stock Advisor analyst team recently identified Costco Wholesale as not being one of the 10 best stocks to buy now, suggesting a potential underperformance compared to other investment opportunities.
  • Costco's main appeal relies on in-person warehouse visits, making it potentially more vulnerable than Walmart if consumer behavior shifts further away from physical stores.
Full Analysis
The article identifies Costco Wholesale (NASDAQ: COST) and Walmart (NASDAQ: WMT) as top consumer staples stocks for long-term investors, highlighting their ability to provide predictability and stability even during market volatility. Costco maintains an extremely loyal customer base driven by its bulk deals, Kirkland Signature private-label brand, and in-person warehouse experience, which is further reinforced by high membership retention. For fiscal 2026's second quarter ending Feb. 15, the company reported a 92.1% member renewal rate in the U.S. and Canada and nearly 90% worldwide. While Costco focuses on physical stores with disciplined expansion plans targeting international locations like Canada by year-end, it is also enhancing its e-commerce capabilities through personalized recommendations derived from website and app search history. Walmart differentiates itself through a wider selection of brands and sizes alongside robust delivery options, including drone delivery in select markets and three-hour express services. The retailer aims to generate additional revenue streams by expanding its Walmart+ membership program, selling advertising space on digital platforms, and continuing its physical store expansion with nearly 11,000 locations globally. Despite these strengths, the analysis notes that both companies are currently trading at rich forward price-to-earnings ratios, suggesting conservative investors might wait for a stock price pullback before entering positions. Furthermore, while both stocks have shown less volatility than the S&P 500 over the past five days, they have still declined slightly, reminding investors that recession-resistant earnings do not guarantee immune stock prices. The author expresses a slight preference for Walmart due to its higher dividend yield and lower beta, though ultimately recommends considering both as valuable additions for decades-long holding periods where timing is less critical than duration. The article concludes with an advertisement for The Motley Fool Stock Advisor, noting that Costco was excluded from their recent list of 10 preferred stocks, while historically recommending Nvidia and Netflix at specific dates in the past decade. Both companies are noted to be held by The Motley Fool itself.