7 Best Department Store and Discount Retailer Stocks to Buy

2. Costco Wholesale Corp (NASDAQ:COST)

Number of Hedge Fund Holders: 71

Costco (NASDAQ:COST) is a Washington-based retail company specializing in a wide array of products for its consumers and ranks second on our list of the 7 best department store and discount retailers stocks to buy.  It currently operates around 878 warehouses, and plans to open 28 new stores in 2024 across the globe, with most of them being in the US.

Costco (NASDAQ:COST) has maintained a steady business throughout the years. One of the primary reasons behind the company’s continuous growth is its operation sector. It functions in a sector poised to withstand economic turbulence and is likely to see an increase in revenue and memberships as it continues to grow. In addition, Costco (NASDAQ:COST) is leveraging the shift to online shopping, offering convenience and a wide variety of competitively priced products. It underwent a 21% growth in its ecommerce business in the last quarter. 

The company is traversing a positive trajectory in terms of its financials. Last quarter saw a 9.1% year-over-year revenue growth. While growth was strong in the US, it was even promising internationally, with same-store sales growing 8.5% year-over-year (adjusted for gasoline prices). Costco’s (NASDAQ:COST) international growth potential appears strong. For instance, customers saw a five-hour wait to enter the company’s recently opened store in Okinawa Japan on its first day. Costco also increased its premium membership fee from $120 to $130 a year.

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. The company’s sales are growing in Q3 2024, primarily due to merchandising of high-quality items that resonate with members. Members are also purchasing more core merchandise and discretionary items, and bakery sales are thriving as well.

ClearBridge Sustainability Leaders Strategy stated the following regarding Costco Wholesale Corporation (NASDAQ:COST) in its Q2 2024 investor letter:

“Consumer staples holdings were also standouts in the quarter, such as Costco Wholesale Corporation (NASDAQ:COST), which continues to execute well and delivered better than expected earnings, helped by strong traffic driving better expense leverage. Customers also looked to be shifting toward more discretionary purchases.”