We recently published a list of 11 Best Retail Stocks to Buy Right Now. In this article, we are going to take a look at where Costco Wholesale Corporation (NASDAQ:COST) stands against other best retail stocks to buy right now.
Resilient Consumer Spending, Falling Consumer Sentiment
Although the stock market is undergoing volatility due to the effects of Trump’s tariffs, the March retail sales report brought a beacon of light by showing that consumer spending remained stronger than expected. The Commerce Department reported that while consumer sentiment continued falling, demand remained high.
The retail sales advanced estimate showed a 1.4% month-over-month growth, surpassing the Dow Jones estimate of 1.2% and significantly exceeding the 0.2% increase in February. CNBC reported on April 16 that, according to numbers adjusted for seasonality (but not prices), the year-over-year growth came up to 4.6%. The monthly rise was the highest since January 2023.
The numbers were also better than expected, excluding autos, as sales grew 0.5% compared to the forecast of 0.3%. Economists anticipated that auto sales would rise as consumers attempted to get ahead of the impending aggressive tariffs imposed by President Trump. Hobby, sports goods, and music stores also underwent a 2.4% growth, while hardware stores and building materials underwent a 3.3% rise. Similarly, food service and drinking places grew by 1.8%.
These trends thus show that consumer spending is demonstrating resilience amid the uncertainty brought about by tariffs and the concerns of a weakening economy. CNBC reported that Chris Rupkey, chief economist at Fwdbonds, said the following about the situation:
“Net, net, these are simply blow-out numbers on March retail sales where the rush is on like this is one gigantic clearance sale. Consumers are expecting sharply higher prices the next year and are clearing the store shelves and picking up bargains while they can.”
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What March’s Positive Retail Sales Report Could Mean
These positive retail sales numbers challenge various market sentiment readings that pointed toward looming fears that Trump’s tariffs would plunge the American economy into a recession and take prices sky-high. We discussed this situation in a recently published article on 11 Best Internet Retail Stocks to Buy According to Analysts. Here is an excerpt from the article:
Trade policies and tariffs have dominated the stock market since the beginning of April, resulting in volatility and uncertainty. However, CNBC reported on April 16 that retail sales rose 1.4% in March, surpassing expectations. CNBC reported earlier on April 15 that the March retail sales report had the potential to impact investor positioning and confidence. According to Dow Jones, economists and experts anticipated a 1.2% month-over-month growth.
CNBC reported that the primary catalyst for this growth is a pull-forward of consumer spending to get ahead of increased good prices brought about by tariffs. It also reported that Freedom Capital Markets chief global strategist Jay Woods opined that retail stocks could undergo a short-term bounce if the retail sales report were in line or better than expected. He said:
“Some of these names have gotten way too far ahead of themselves on the downside that bounces are natural. They’ve gotten beaten down and mean reversion could lead to a nice rally over the coming days.”
Callie Cox, chief market strategist of Ritholtz Wealth Management, expressed similar sentiments, saying a strong retail sales report could potentially lead to a rise in consumer discretionary stocks.
“Consumer Discretionary stocks have been hit so hard that they may be more susceptible to a relief rally on the back of a retail sales report that doesn’t show the economy is falling apart,” said Cox.
With the retail sales report exceeding expectations, these analyst opinions could potentially come true.
Our Methodology
We sifted through stock screeners, financial media reports, and ETFs to compile a list of 30 retail stocks and chose the top 11 most popular among hedge funds as of Q4 2024. The list is ordered in ascending order of hedge fund sentiment. We sourced the hedge fund sentiment data from Insider Monkey’s database.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A customer in a warehouse aisles, browsing the wide range of branded and private-label products.
Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Holders: 96
Costco Wholesale Corporation (NASDAQ:COST) operates membership-only big box warehouse club stores and is one of the most popular department stores in the US. It offers its customers elaborate offerings, including food, beverage, groceries, and more.
Costco Wholesale Corporation (NASDAQ:COST) is one of the most resilient retailers in the sector, and its membership fees are pivotal to its profit generation. In fiscal 2024, the company made $4.8 billion in membership fees. It recently increased its base membership fee to $65, which will be reflected in the current fiscal year’s earnings. Its paid members have also grown by 7% annually over the last two years.
Despite weakening consumer sentiment and inflation, Costco Wholesale Corporation (NASDAQ:COST) delivered strong comparable sales in fiscal Q2 2025, rising 9.1% (excluding fuel prices and currency exchange) and reflecting strong demand for its offerings. The company’s e-commerce sales also grew by 22.2%, demonstrating strong consumer appetite and ranking it second on our list of the top retail stocks to invest in right now.
Costco Wholesale Corporation (NASDAQ:COST) is also continually expanding its operations. It ended fiscal Q2 2025 with 897 warehouses. Last year, it added 29 stores, expanding its store base by roughly 3%.
Overall, COST ranks 2nd on our list of the best retail stocks to buy right now. While we acknowledge the potential for COST as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than COST but trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.