Shares of major retailers such as Walmart (WMT) and Costco (COST) have experienced impressive gains in 2024. This implies that their value propositions strongly resonate with consumers and have translated into solid financial performances.

Costco, known for its membership-based warehouse model, has seen its stock soar by nearly 42% year-to-date. Walmart, with its diverse retail offerings, has posted an even more remarkable 73.9% gain in its stock price.

These stellar performances from two of the top retailers reflect their resilience, especially as they continue to outperform the broader equity markets amid ongoing macroeconomic uncertainty. As we look ahead to 2025, let’s explore which of these retail giants presents a better investment opportunity.

Costco Stock

Costco continues to deliver solid financials, driven by higher comparable sales and its ability to attract customers with competitive pricing and convenience. Its strong membership renewal rates are key to its growth, reflecting customer loyalty and offering a steady stream of fee revenue. By the end of Q1 2025, the membership renewal rate was 92.8% in the U.S. and Canada, with a global rate of 90.4%. This reflects Costco’s ability to retain its customers even in a challenging economic landscape.

Notably, the boost in executive memberships and the company’s ability to raise fees with minimal churn further support its growth prospects. In fact, Costco recently increased its membership fees, a move that will drive its fiscal 2025 earnings and support Costco stock.

Costco will continue opening new warehouses in 2025, further bolstering its sales. Additionally, Costco’s growing e-commerce operations are a promising area of growth. In Q1, e-commerce traffic, conversion rates, and average order values all showed positive trends. The rollout of services such as “buy online, pick up in-store” for high-ticket items has enhanced customer convenience and reduced shipping costs.

Costco’s logistics operations have also been supporting its e-commerce growth, particularly for bulky items. In Q1, Costco delivered nearly 1 million items via Costco Logistics.

With its growing sales, geographic expansion, high membership renewal rates, and strength in e-commerce platform, Costco is well-positioned for continued growth in 2025.

Analysts rate the stock a “Moderate Buy” due to its premium valuation. However, Costco’s consistent and high growth and strong competitive positioning justify its high valuation.

Walmart Stock

Walmart has registered exceptional gains in 2024. This strong performance reflects the retail giant’s solid financial results and market share gains. For the nine months of 2024, Walmart reported a 5.4% increase in net sales and 8.8% growth in adjusted operating income.

Looking ahead, Walmart has multiple growth catalysts that could help its stock sustain upward momentum in 2025. The retailer’s value proposition, including low prices, a wide product range, and convenience of shopping, will continue to drive traffic and comparable sales. Further, private-label products are likely to support its sales and margins.

Walmart’s digital platform will continue to play a key role in 2025, driving its overall financials and share price. The company’s e-commerce sales surged 27% globally in Q3, reflecting increased demand for its delivery and pick-up options. The company is also seeing strong membership trends, with Walmart+ showing double-digit growth and Sam’s Club setting records in member counts.

The company’s marketplace and advertising segments are also thriving. Walmart’s global advertising business grew 28%, including a 26% increase for Walmart Connect in the U.S. By successfully integrating advertising into its marketplace, Walmart is poised to deliver solid growth in the advertising business as it is building a unique retail media platform.

Investments in automation and artificial intelligence (AI) are further strengthening Walmart’s competitive edge. With more than 50% of its e-commerce fulfillment center volume now automated, Walmart is poised benefit from improved operational efficiency.

Wall Street remains optimistic about Walmart’s prospects ahead of 2025, with a “Strong Buy” consensus rating signaling continued confidence in the company’s ability to deliver solid results.

Which Retail Stock Should You Choose in 2025?

Both Costco and Walmart offer compelling growth stories. Costco’s membership-driven model and focus on convenience and low prices provide a steady foundation for growth, while its expanding e-commerce operations will likely accelerate its growth. Walmart’s broader market reach, aggressive digital and advertising strategies, and investments in automation make it a formidable player for 2025.

For investors, both stocks are worth considering in the retail sector. However, analysts favor Walmart at the moment. Further, Costco stock is trading at a premium valuation, making Walmart a more attractive option for value-conscious investors.