Wal-Mart Stores, Inc. (WMT), Costco Wholesale Corporation (COST): The Most Stable, Consistent, and Ever-Growing Investment

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Talking about Canada, can’t miss Target

One of Wal-Mart’s major competitor, Target Corporation (NYSE:TGT) has also entered the Canadian market in this year’s first quarter. Its initial performance in Canada is motivating, thus the company is planning to initiate more stores in the country. The company has already been able to achieve a gross margin of 38% with the help of its REDcard penetration during its early stage of establishing in Canada. REDcard penetration in Canada was quite strong as around 30,000 accounts had already been opened, before Target Corporation (NYSE:TGT) entered the Canadian market; and it further increased to 44,000 after stores were opened.

Pfresh, too, helped the company’s top line by helping sales in grocery and household categories to surge at an average of 10% in the last three years. Apart from trying to expand internationally, like Wal-Mart, Target Corporation (NYSE:TGT) also has gone into acquisitions and partnerships with Chef’s Catalog and Cooking.com in order to improve its Omni Channel network, including its online and mobile sales. Further, it has collaborated with Facebook, Google and eBay in order to expand its customer base.

Digging into another competitor

Costco Wholesale Corporation (NASDAQ:COST) operates membership warehouses in the U.S. and other places internationally. Costco Wholesale Corporation (NASDAQ:COST)’s performance has been better in the last quarter than Wal-Mart and Target Corporation (NYSE:TGT) as it reported a 5% increase in its comparable-store sales where as the other two retailers reported negative comp sales.

Costco Wholesale Corporation (NASDAQ:COST)’s 19% growth in members, apart from a hike in the fees, clearly points to the fact that it has a loyal customer base which is attracted to its everyday low prices. As the membership fees are collected upfront, the company books almost its entire profit a year in advance and also creates a potential customer base for the future.

Costco Wholesale Corporation (NASDAQ:COST) also understands the growth potential that e-commerce offers and is working to overhaul its website and its mobile applications. The company is potentially saving itself from the cannibalization effect – which growth in its online sales could have on its store sales – by offering discrete products in stores and its online platform. Further, it is investing profoundly on its private labels, a cheaper alternative to the other established brands, as they have previously driven sales and provide scope for the future too.

Final take

All the stores are realizing the importance of an online format and are thus aggressively moving forward on it. Currently, among the three big-box retailers, Costco Wholesale Corporation (NASDAQ:COST) seems to be going strong with its comp sales and margins both being on the higher side. All three companies are sound investment options if investors are looking for stability, as that is what these stocks promise to offer.

ADITYA LADHA has no position in any stocks mentioned. The Motley Fool recommends Costco Wholesale. The Motley Fool owns shares of Costco Wholesale.
ADITYA is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article The Most Stable, Consistent, and Ever-Growing Investment originally appeared on Fool.com is written by ADITYA LADHA.

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