Costco Wholesale Corporation (COST), Wal-Mart Stores, Inc. (WMT): The Right Retail Stocks to Buy

The company has faced certain issues in the last year such as bribery allegations in Brazil, China, and India and protests from its employees for ill-treatment. Further, there are concerns over the sluggish growth rate in China and the new signs of Europe’s economic weakness that can affect the company’s growth uptrend.

The investors should not be too worried about their investments as Wal-Mart Stores, Inc. (NYSE:WMT) has historically managed to rebound from any negative development very well, and its diversified operation will further act as a cushion for it. I believe this is a solid investment for investors who are seeking a regular income source rather than a major capital gain.

A peep into Target (NYSE:TGT)

Target Corporation (NYSE:TGT) is the second largest discount retailer in the United States. It’s recently reported earnings were nothing to be happy about with profits reducing 2% to $961 million compared to the same period last year. The company’s performance suffered as the gift items were not able to produce the desired results and the discounts offered, particularly in the holiday season, pushed margins lower.

Target has plans such as letting its customers pay online and collect in-store, same day delivery, like Wal-Mart Stores, Inc. (NYSE:WMT), and meeting to needs of shoppers using mobile phones. The company’s main medium to grow this year is its maneuvers in Canada, where it anticipates superior margins. Moving forward, Target will be giving its credit card portfolio to Toronto Dominion Bank and come up with 124 new stores in Canada. This should help the company to improve its top and bottom line.

Final words

Costco Wholesale Corporation (NASDAQ:COST) is the best pick going forward at the moment, as its performance in foreign markets has been good, and its business model of charging members upfront provides certainty to its income stream. Wal-Mart Stores, Inc. (NYSE:WMT) too is a good pick at its current prices because of its large scale of operations and a diversified business structure. Target too is a good hold and should tap in benefit from its Canadian operations. However, I do not recommend investors to buy Target now.

The article The Right Retail Stocks to Buy originally appeared on Fool.com and is written by Tarun Bachhawat.

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