Costco (NASDAQ: COST) has demonstrated robust growth in the retail sector, with a remarkable 221% increase in the past five years. This type of growth is typically associated with technology stocks and surpasses competitors like Walmart and Target. Costco’s wholesale business and annual membership have experienced a 59% surge in revenue during the same period. Despite current success, the steep rise in the stock’s value has raised the barrier to entry for new investors.

While Costco’s trajectory has favored existing shareholders, the stock’s inflated price may deter prospective buyers.

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Comparatively, two other retail giants, Amazon (NASDAQ: AMZN) and Apple (NASDAQ: AAPL), present more compelling opportunities for investors than Costco. While Amazon and Apple’s stocks may not be bargains, they offer greater value potential than Costco, making them worthy contenders for investment over the wholesale giant.

Therefore, it might be prudent to set aside Costco and explore the possibilities offered by these unstoppable stocks.

Amazon: Unrivaled Presence and Diversification

Amazon has emerged as a retail powerhouse, commanding a commanding 38% share of the e-commerce market. For perspective, Walmart, the next closest competitor, holds only 6% of the market share. Amazon’s influence extends to markets it never targeted. Notably, the e-commerce giant controls 44% of all U.S. video game sales, outpacing GameStop and Apple’s App Store.

Amazon’s success has provided the company with the financial stability to diversify its business. In addition to e-commerce, Amazon has become a pivotal player in cloud computing, artificial intelligence (AI), video streaming, and digital advertising. These rapidly expanding markets allow Amazon to rely less on product sales and more on high-margin digital ventures.

Amazon Web Services (AWS), the company’s cloud platform, has evolved into its most profitable division, positioning Amazon prominently in AI development. Businesses are increasingly adopting cloud services to incorporate AI into their operations, with AWS ranking as the world’s largest cloud platform.

In the first quarter of 2024, AWS reported a 17% revenue growth year over year, with operating income nearly doubling to exceed $9 billion (representing 60% of Amazon’s total operating income).

Amazon’s business witnessed exponential growth in the past year, driving its free cash flow up by more than 1,000%. With an upward trajectory, Amazon’s stock emerges as a more favorable option than Costco’s in the current market.

Apple: Brand Loyalty and Expansion into Emerging Technologies

Similar to Costco and Amazon, Apple has cultivated strong brand allegiance among consumers. Leading the consumer tech industry, Apple’s products enjoy immense popularity. Despite offering a smaller range of products compared to industry leaders like Amazon and Walmart, Apple has achieved the third-largest market share in e-commerce.

Apple encountered challenges over the past year, with declining product sales raising investor concerns and contributing to a modest 12% stock price increase within the last 12 months. This growth is less than half of the S&P 500′s 26% surge during the same period, although the tech titan has a track record of surpassing the index.

However, the company’s loyal customer base and substantial financial resources suggest that Apple is poised for a strong rebound in the long term. With a free cash flow of $102 billion last year, surpassing competitors like Microsoft, Alphabet, and even Amazon, Apple has the financial capacity to sustain investments and weather prevailing headwinds.

In 2024, Apple has ventured into two burgeoning sectors: AI and virtual/augmented reality (VR/AR). These markets are forecasted to grow at compound annual rates of 37% and 27% respectively through 2030, underscoring Apple’s substantial growth potential.

Earlier this year, Apple unveiled its inaugural VR/AR headset, the Vision Pro, with reports indicating the development of a more affordable version to broaden accessibility among consumers. Simultaneously, the company is investing in AI, debuting Apple Intelligence to incorporate generative features across its product portfolio, potentially boosting sales as consumers upgrade devices to access Apple Intelligence.

For investors seeking an alternative to Costco’s stock, Apple presents a compelling opportunity with significant growth potential as it expands its product range in the upcoming years. Not to mention the promising prospects in digital services and fintech that could further enhance earnings growth.

Diversify Your Portfolio: Consider Amazon and Apple Over Costco for Investing

Before making a decision to invest in Amazon, it’s crucial to weigh the following:

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