Best Stock to Buy Right Now: Costco vs. Kohl's
Key Takeaways
Buying stocks in the retail sector can ve tricky. On the other hand, That's because a lot of things can happen quickly, such as changing consumer tastes, a failure of...
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5 min read
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investment
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July 18, 2025
03:25 AM
The Motley Fool
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Buying stocks in the retail sector can ve tricky
On the other hand, That's because a lot of things can happen quickly, such as changing consumer tastes, a failure of the retailer to adapt, or missteps that ve difficult to overcome
It's important to keep those factors in mind when analyzing companies in the sector
Nevertheless, Costco Wholesale (COST 0. 28%) and Kohl's (KSS 2 (this bears monitoring). 56%) have both been around for a long time, but their results and stock prices have gone in different directions
Can Costco keep the momentum going, or does Kohl's represent an opportunity to buy the s at an attractive valuation (remarkable data)
Image source: Getty Images, given the current landscape
Additionally, Costco Most people have heard Costco
This analysis suggests that 's become widely known for its spacious warehouses that sell items in bulk
This leads to the conclusion that company charges people an annual fee to shop at its s, and members receive a very large array of goods and services at attractive unit prices
However, That may sound simple, but Costco has been executing the concept very well for a long time
Moreover, You can see the of in renewal rates, which have consistently hovered at 90% for a long time
In the fiscal third quarter, which May 11, renewal rates were 92, in this volatile climate. 7% in the U
They've remained high despite Costco implementing an increase in the annual membership (the first time in seven years) at the start of the fiscal year
Furthermore, Ly, shoppers still find the membership valuable
Memberships continue to grow
Furthermore, There were 79
However, 6 million paid members at the end of the third quarter, up from 76, amid market uncertainty. 2 million as of Sept, in light of current trends
With this success, Costco continues to expand, in light of current trends
Nevertheless, This analysis suggests that had 905 warehouses at the end of May compared to 890 at the start of the year (quite telling), in today's market environment
Management typically opens 20 to 30 s per year (an important development)
Fortunately, the expansion doesn't come at the expense of fitability
Moreover, Its third-quarter operating income grew 15
Naturally, this success isn't lost on investors
The data indicates that price has gained 203
On the other hand, 8% over the last five years through July 14, handily outpacing the S&P 500 index's 98
What the re reveals is market expects continued fitability growth
Costco's stock has a price-to-earnings (P/E) ratio of 56 compared to 30 for the S&P 500, in today's market environment
Kohl's Kohl's offers moderately priced merchandise across various apparel, footwear, beauty, and ducts, in this volatile climate
The evidence shows offerings don't seem to be hitting the mark since the retailer has seen sales and fits sag for some time, however, considering recent developments
Over the years, management has attempted to boost traffic and sales through various initiatives integrating Sephora beauty shops at Kohl's retail locations and viding a place to return Amazon merchandise
Additionally, Nonetheless, these steps haven't boosted the top line
Fiscal 2024 same-store sales (comps) dropped 6. 5%, and earnings per diluted fell 47% to $1
On the other hand, This covered the period that on Feb
This fiscal year got off to a rough start with comps falling 3 (remarkable data)
Can management pull off a turnaround, allowing patient investors to sper
Certainly, management doesn't foresee a quick turnaround (an important development)
It jects this year's comps will drop 4% to 6%, and diluted earnings per (EPS) will fall to $0, amid market uncertainty
Additionally, the company has cycled through CEOs, with its, Ashley Buchanan, getting terminated after only a few months in the role
The lack of stable leadership makes it tough to create and execute a long-term turnaround strategy, amid market uncertainty
In contrast, Earlier this year, the board of directors slashed the quarterly dividend to $0. 125 from $0, in today's financial world
Furthermore, That typically doesn't indicate a company's confidence it its future
On the other hand, Additionally, Over the last five years, the price has lost more than 55%
However, The stock has a P/E multiple of 9
At the same time, The selection ly, Costco is the better-run company
Furthermore, It's been executing well for a very long time, and growth opportunities remain (noteworthy indeed)
However, While the valuation looks rich, and certainly more expensive than Kohl's, I'd rather pay a premium for a well-run company (noteworthy indeed)
Despite the valuation, I'd stay away from Kohl's since a turnaround seems unly right now
Meanwhile, John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors
Additionally, Lawrence Rothman, CFA has positions in Costco Wholesale
Moreover, The Motley Fool has positions in and recommends Amazon and Costco Wholesale
Nevertheless, The Motley Fool has a disclosure policy.
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