This is why the company racks up sales gains of a steady 10%/year. Even though the gross gain of $11 billion is smaller than Wal-Mart’s annual gain of $25 billion, it’s bigger in percentage terms and thus better for the investor. The dividend isn’t as good, yielding just 1.03%, but I’ve had it in my own portfolio for less than a year and scored a gain of nearly 20% from it.
Amazon: When a retailer is not a retailer
Amazon.com, Inc. (NASDAQ:AMZN) has done the best of these names by far over the long run, increasing almost 850% over the last 10 years, against 260% for Costco and just 52% for Wal-Mart Stores, Inc. (NYSE:WMT). For the year so far, however, Amazon’s gains trail those of its larger rivals, with the shares meeting headwinds around the $260/share level, up just 5% so far.
Forget about dividends. You’re not even going to see profits. Amazon.com has sales of $62 billion for 2012, more than twice the $24.5 billion level of just three years ago. This is a growth story, nothing but.
It’s also not a retailing story. Amazon.com, Inc. (NASDAQ:AMZN) is priced as a tech stock, specifically a cloud stock. Amazon Web Services is the dominant public cloud, and since opening it for use by other businesses Amazon has brought nothing to the bottom line, so intent is it on investing in its computing systems and keeping prices low.
There’s no real comparison between a company that has $2.50 in equity for every $1 in sales and a regular retailer – both Costco and Wal-Mart have far more sales each year than equity value. But if you want growth, Amazon.com, Inc. (NASDAQ:AMZN) is where you’ll find it.
To CEO Jeff Bezos computing is just another form of logistics, and selling cloud is not that much different from handline another online store’s deliveries and sales tax collections. The company’s sales are even more business-oriented than Costco Wholesale Corporation (NASDAQ:COST)’s, and delivered at razor-thin margins that aim to take the competition out of the game.
Which should I buy?
There is an investment here for every taste. If you like dividends, buy Wal-Mart Stores, Inc. (NYSE:WMT). If you like retailing growth and a sustainable business model, buy Costco. If you want growth, find a place where you can buy Amazon.com.
Each of these companies pursues growth in a different way, and each is barely on the others’ radar. All of them should be on your investment radar. They’re the best long-term plays in retailing, by far, for the 21st century investor.
The article Wal-Mart, Costco, or Amazon.Com? originally appeared on Fool.com and is written by Dana Blankenhorn.
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