Resilient Retailers: Three Evergreen Stocks Worth Investing In

While many retailers face challenges from broader economic factors and competition, a few have successfully adapted. Here’s a look at three resilient companies that stand out as “evergreen” investments: Walmart (NYSE: WMT), Amazon (NASDAQ: AMZN), and Costco Wholesale (NASDAQ: COST).

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Walmart’s Adaptive Strategies

Walmart operates over 10,600 stores and warehouse clubs in various countries including the U.S., Mexico, and China. It has diversified with regional stores and online shops across 19 nations.

Years ago, Walmart struggled against the growing influence of Amazon. To regain its competitive edge, Walmart focused on improving existing stores, enhancing customer service, and developing its e-commerce platforms. By matching Amazon’s prices and fulfilling online orders via its stores, it adapted to market demands.

From fiscal year 2014 to 2024, Walmart experienced a stable revenue growth rate of 3% even amidst challenges like the pandemic and inflation. Analysts predict its revenue and earnings per share (EPS) will grow at 5% and 11%, respectively, from fiscal 2024 to 2027 as it enhances automation and digital features and boosts Walmart+ subscriptions.

While Walmart’s stock trades at 37 times forward earnings, its scale and innovative strategies justify this valuation, making it a strong long-term investment.

Amazon’s Continued Dominance

Amazon has changed the retail landscape significantly, driving many big box stores out of business during the last 15 years. With over 200 million Prime members, it stands as the leading e-commerce company globally. Amazon’s operations now extend beyond retail, as it owns Whole Foods, offers streaming services, and develops Alexa-powered devices.

The majority of Amazon’s profits come from its cloud platform, Amazon Web Services (AWS), allowing it to operate both its first- and third-party marketplaces with lower margins.

AWS is the world’s largest cloud service provider, growing rapidly as businesses upgrade their infrastructure for better data analytics and AI capabilities. From 2014 to 2024, Amazon’s revenue grew at a CAGR of 22%. Analysts forecast a revenue and EPS growth of 10% and 17%, respectively, from 2024 to 2026, as the economic climate stabilizes. Priced at 36 times forward earnings, it remains an appealing option in the thriving e-commerce and cloud landscapes.

Costco’s Membership Model

Costco has effectively competed against giants like Amazon and Walmart by attracting customers through its membership model, offering significant savings on bulk purchases. The membership fees help offset the lower margins on products sold.

Costco’s business model remains strong as long as it continues to open new warehouses and secure high member renewal rates. Between fiscal 2014 and 2024, it seized a growth from 663 to 891 locations, increasing membership from 76,000 to 136,800 cardholders, and raising its renewal rate from 87% to 90.5%. Its revenue showed a CAGR of 8% during this period.

Projected revenue and EPS growth from fiscal 2024 to 2027 are expected to hit CAGRs of 7% and 10%, respectively. Even though Costco’s stock is priced at 52 times next year’s earnings, its growth trajectory positions it solidly for the future.

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*Stock Advisor returns as of February 3, 2025

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Leo Sun holds positions in Amazon. The Motley Fool has investments in and recommends Amazon, Costco Wholesale, and Walmart. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.