Costco (NASDAQ: COST) has grown into an impressive retail stock, delivering growth of 221% over the last five years. That kind of growth is usually reserved for tech stocks and outperforms competitors Walmart and Target. Costco’s wholesale business and annual membership have seen revenue soar 59% in the same period. Meanwhile, the company has massive growth potential as it continues to expand abroad.

However, just because a company’s business is flourishing doesn’t necessarily mean now is the right time to buy its stock. While recent growth has benefited current Costco investors, it has also raised the price of entry for new ones and tanked the value of its stock.

Data by YCharts

This chart uses two key valuation metrics to show that two fellow retailers, Amazon (NASDAQ: AMZN) and Apple (NASDAQ: AAPL), offer significantly more value to investors than Costco. Amazon and Apple’s metrics don’t exactly make their stocks bargains, but they provide more bang for your buck than Costco, making them worth considering over the warehouse retailer.

So, forget Costco and consider buying one of these unstoppable stocks instead.

1. Amazon

Amazon has grown into a behemoth in retail, responsible for 38% of the e-commerce market. For reference, Walmart holds the second-largest share of the market at just 6%. Amazon’s reach is so vast that it dominates markets it never intended to. For instance, the online retailer is responsible for 44% of all video game purchases in the U.S., even surpassing GameStop and Apple’s App Store.

Amazon’s success over the years has given it the financial resources to diversify its business. In addition to e-commerce, the company has become a major factor in cloud computing, artificial intelligence (AI), video streaming, and digital advertising. These markets are expanding quickly, allowing Amazon to lean less on product sales and more on digital ventures that offer higher profit margins.

The company’s cloud platform, Amazon Web Services (AWS), has quickly become its most profitable division and grants it a promising role in AI. Businesses are increasingly turning to cloud services to integrate AI into their workflows. Meanwhile, AWS is the world’s biggest cloud platform.

In the first quarter of 2024, AWS reported revenue growth of 17% year over year, while operating income nearly doubled to surpass $9 billion (or 60% of Amazon’s total operating income).

Over the last year, Amazon’s business has exploded, leading its free cash flow to soar more than 1,000%. The company is on a growth trajectory that is too good to pass up, with its stock a better buy than Costco this month.

2. Apple

Like Costco and Amazon, Apple has built up immense brand loyalty with consumers over the years. The company leads the consumer tech market with the popularity of its products. Its dominance in the industry is most prevalent by its third-largest market share in the e-commerce industry, which it has achieved despite offering a significantly smaller product range than the industry’s leaders (Amazon and Walmart).

Apple has faced headwinds over the last year as declines in product sales have concerned investors and seen its price trickle up just 12% in the last 12 months. The figure is less than half the S&P 500′s 26% rise in the same period, though the tech giant has a reputation for often outperforming the index.

However, a loyal user base and vast financial resources suggest that Apple will come back strong over the long term. The company hit $102 billion in free cash flow last year, more than rivals like Microsoft, Alphabet, or even Amazon. The figure indicates Apple has the funds to keep investing in its business and overcome current headwinds.

In 2024, the tech giant has expanded into two burgeoning sectors: AI and virtual/augmented reality (VR/AR). These markets are projected to expand at compound annual growth rates of 37% and 27% through 2030, illustrating Apple’s massive potential.

At the start of this year, the company launched its first VR/AR headset with the Vision Pro and is reportedly working on a cheaper version that will be more accessible to the average consumer. Meanwhile, the company is investing in AI, announcing Apple Intelligence earlier this month. The AI platform will bring generative features across its product lineup and could boost sales as consumers update devices to access Apple Intelligence.

Apple is a no-brainer for anyone looking for an alternative to Costco’s stock and could deliver significant gains as it expands its product lineup in the coming years. And that’s before considering promising positions in digital services and fintech, which could further drive earnings growth.

Should you invest $1,000 in Amazon right now?

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