10 Best Discount Retailer Stocks to Buy

2. Costco Wholesale Corporation (NASDAQ:COST)

Number of Hedge Fund Holders: 71

Costco (NASDAQ:COST) is a Washington-based multinational corporation that ranks second on our list of the 10 best discount retailer stocks to buy. It operates a chain of membership-only big-box warehouse retail stores, and currently has around 878 warehouses in the US. Costco (NASDAQ:COST) plans to open 28 new stores in 2024 across the globe, most of which are in the US. The company’s membership model offers exceptional prices to its customers, giving it a distinct competitive advantage in the industry. Its membership fee income reached $1.122 billion in Q3 fiscal 2024, undergoing an increase of 7.6% year-over-year. Membership renewal rates stood at 93% across the US and Canada and 90.5% globally, highlighting continued consumer confidence in the company.

Costco’s (NASDAQ:COST) investments in improving its e-commerce platform and expanding its store network are proving to be primary drivers of revenue growth. It reported an increase in net income for its Q3 of fiscal 2024, going from $1.3 billion in Q3 2023 to $1.68 billion in Q3 2024. The company’s net sales also increased in the same period, growing 9.1% from $52.6 billion in Q3 2023 to $57.39 billion in Q4 2024.

Costco’s (NASDAQ:COST) strong stock performance has boosted investor confidence, with positive anticipation for its Q4 2024 earnings report. Apart from strong analyst expectations regarding increased revenue and EPS, Costco’s effective cost management and strong brand loyalty make it stand out as a reliable investment with much growth potential.

Costco (NASDAQ:COST) sports a consensus Buy rating among analysts, with its median price target of $892 implying an upside of 4.88% from current levels. Mad Money host and former hedge fund manager Jim Cramer described the company as the second-largest pure-play retailer in the country, saying the following:

“Costco is like no other. It’s the second-biggest pure-play retailer in the country, and it functions basically as a gigantic buying group for its members who order pretty much everything. The membership gets you amazing prices, including some that are likely below what the store itself pays, like the bottles of wine I mentioned the other day and the gold bullion everyone is so crazy about.

Costco is a one-of-a-kind retailer where you might not find everything, but what you do find is likely cheaper than anywhere else. This store has done the most to roll back prices in this nation, often through its premium house brand, Kirkland Signature. Costco isn’t afraid to go after any nationally branded product if it won’t lower prices, and under the Kirkland label, they get prices down because the Kirkland brand is better than most of the branded stuff.”