Since hitting the lows in June Nasdaq The index is up nearly 25 percent. Such a move leaves investors wondering whether the index is in a bear market rally or has actually returned to a bull market.
While investors still don’t know the answer to that question, some stocks should make great long-term options regardless of the short-term ups and downs in the market. In the consumer space, retail stocks such as costs (Cost -1.15%) and MercadoLibre (MELI -6.93%) has shown such potential.
When it comes to reliability, few consumer stocks can match Costco. The company has managed to drive revenue growth in almost every economic environment. Its attractive product mix and competitive pricing has revealed a good cycle of strong revenue and market expansion.
Although the US accounts for 577 of its 836 stores, it is served by several mid-sized metropolitan areas. WalmartSam’s Club does not yet have a competing Costco. In addition, many large US metropolises, especially east of the Rockies, still lack a business center. Therefore, these business-focused Costco warehouses can still help drive domestic growth.
Additionally, only 259 locations serve the rest of the world. Because Costco hasn’t addressed the cultural issues holding back Walmart’s growth outside of North America, it faces some problems as it continues to expand overseas.
Costco has a large base from which to expand. In the first nine months of fiscal 2022, the company reported revenue of $152 billion, up 16% from the same period in 2020. With a similar deadline in 2020.
That growth helped the stock soar 23% over the past year, at a time when it was doing so S&P500 A little down But the challenge with Costco stock is its cost. Largely due to its track record of reliable growth, it has a P/E ratio of 44. That’s 30 times earnings, or significantly more than Walmart. target At a P/E of 15, the question is whether Costco stock is worth it.
Still, analysts are forecasting revenue growth of 16% for the remainder of fiscal 2022 and 9% next year. Such continued growth and potential future gains could make Costco’s spending worthwhile.
MercadoLibre has emerged as one of the better performers over the past few months. at a time heroineWhile e-commerce sales have shut down, MercadoLibre’s online sales remain relatively strong.
However, like Amazon, MercadoLibre doesn’t make its biggest profit in the e-commerce space. In the second quarter of 2022, trade-related revenue increased by 22%. That didn’t compare to the fintech segment, which grew its total payments volume by 72% to $30 billion over the same period.
Fintech’s growth scale is particularly interesting as Latin America’s dependence on cash has necessitated the development of fintech-related apps. This deal, which also supports fintech activities unrelated to MercadoLibre’s e-commerce, has helped make MercadoLibre a forerunner in Latin American fintech.
Driven primarily by e-commerce and fintech, net sales for the first six months of 2022 were $4.8 billion, up 57% from the prior-year period. This includes a 43% increase in cost of net sales and an 81% increase in operating expenses. Nonetheless, its net income of $188 million for the first half was much higher than its profit of $34 million for the first two quarters of 2021.
MercadoLibre does not publish any guidelines. Analysts are forecasting revenue growth of 47% this year and 28% in 2023. While that’s strong growth, it represents a somewhat declining trend.
Still, a nearly 50% drop in the stock price from its 52-week high should help offset slower revenue growth. And considering the price-to-sales (P/S) ratio of six, MercadoLibre looks like a better buy.
John McKay, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Will Healy holds positions at MercadoLibre. The Motley Fool positions and recommends Amazon, Costco Wholesale, Mercadoliber, Target, and Walmart Inc. The Motley Fool has a disclosure policy.