Costco Is One of the Largest Consumer Goods Companies by Market Cap. But Is It a Buy?

First, Costco is more resilient to economic downturns than the typical big-box chain

Most of Costco's revenue comes from groceries, a recession-of category as consumers need to eat regardless of the state of the economy

Additionally, its membership-based model makes the more stable than a typical retailer since its members have already paid a fee to shop there, and they're ly to want to take advantage of that and Costco's low prices

Finally, Costco also caters to a higher-income demographic because of its membership fees, and those consumers are less ly to change their behavior, even with the impact of a recession

While other retailers have struggled lately due to weak consumer discretionary spending and pressure related to tariffs, trade wars, and economic uncertainty, Costco has been unfazed

Through the first 36 weeks of the year, the retailer has reported 8. 1% adjusted comparable sales growth, which excludes gasoline prices and foreign exchange

Those kinds of results explain why Costco is one of the most valuable consumer goods stocks on the market today

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Where does Costco rank among consumer goods stocks

According to re from The Motley Fool, Costco is currently the second-biggest consumer staples company by market cap, ahead of cter & Gamble and behind Walmart

However, Costco has outperformed Walmart this century on the stock market, as the chart below shows

COST data by YCharts Both stocks have performed well in recent years thanks to their economies of scale and leadership in groceries

Costco has a lot of things going for it, including the competitive advantages listed above, which continue to drive the company's growth and market gains

Costco is also still opening stores, separating it from competitors Walmart, which has stopped opening stores

Walmart is instead in e-commerce, infrastructure, and nology

As a, Costco looks rock-solid, but investors also need to consider the price of a stock in addition to the quality of the

Costco's valuation has gotten inflated in recent years as the stock has soared

Its price-to-earnings ratio is now 56, which is more expensive than any of the other biggest consumer goods stocks

Still, the execution in the has been impeccable lately, and its competitive advantages are

Over the long term, Costco still looks well positioned for success

Jeremy Bowman has no position in any of the stocks mentioned

The Motley Fool has positions in and recommends Costco Wholesale and Walmart

The Motley Fool has a disclosure policy.