Best Stock to Buy and Hold Forever: Costco vs. Home Depot

2026-03-10 14:32:41

Owning consumer-facing businesses can be an easier approach in the stock market. That’s because investors are probably more familiar with their products and services since they might be customers themselves. This provides a valuable level of insight.

Applying the framework to the retail sector, investors can look at two dominant forces in the industry. Between Costco (COST +0.80%) and Home Depot (HD 1.28%), which is the best stock to buy and hold forever?

Image source: The Motley Fool.

Both businesses possess wide economic moats

These are high-quality companies because they have both developed durable competitive strengths. This supports their staying power over the long term, minimizing the risk of owning them.

In Costco’s case, its scale is the key advantage. The warehouse club operator generated net sales of $68.2 billion in the second quarter of 2026 (ended Feb. 15). Given its limited number of stock-keeping units, it has immense negotiating leverage with its suppliers, keeping prices constantly low for its customers.

Home Depot deserves attention, too. It’s the largest player in the home improvement industry, with fiscal 2025 (ended Feb. 1) revenue of $165 billion. Its brand is highly regarded. Its size allows it to invest more than rivals in supply chain and omnichannel capabilities to better serve customers.

Pick Costco for its stability

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NASDAQ: COST

Costco Wholesale

Today’s Change

(0.80%) $7.95

Current Price

$1006.05

Key Data Points

Market Cap

$446B

Day’s Range

$988.00 - $1007.41

52wk Range

$844.06 - $1067.08

Volume

Avg Vol

2.6M

Gross Margin

13.60%

Dividend Yield

0.52%

Costco is the top choice if all investors care about is buying and holding the best companies they can find. This is simply a better business than Home Depot. That’s evidenced by Costco’s steady financial gains. It seems the company reports same-store sales (SSS) growth in every fiscal year like clockwork. Even in COVID-filled fiscal 2020, this critical metric rose 7.7%, showcasing the company’s all-weather appeal.

However, this stock isn’t cheap. Investors must be OK paying a price-to-earnings (P/E) ratio of 53.5. That represents a massive 116% premium to the overall S&P 500 index. Shares have crushed the market in the past decade, though.

Pick Home Depot for its valuation

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NYSE: HD

Home Depot

Today’s Change

(-1.28%) $-4.57

Current Price

$353.35

Key Data Points

Market Cap

$352B

Day’s Range

$345.72 - $356.85

52wk Range

$326.31 - $426.75

Volume

Avg Vol

4.3M

Gross Margin

31.33%

Dividend Yield

2.60%

On the other hand, if valuation is a non-negotiable decision variable for you, Home Depot is the preferred alternative. Its shares aren’t nearly as expensive as Costco’s. They can be purchased at a P/E multiple of 25.2. To be clear, though, this is still a slightly higher figure than the S&P 500.

That lower valuation comes with more cyclical demand trends. For example, Home Depot’s same-store sales in the U.S. were up by only 0.5% in fiscal 2025. And management projects a 1% (at the midpoint) overall increase this fiscal year. Customers are feeling the pinch of the uncertain macro backdrop, hesitating to take on renovations and upgrades.

Home Depot is still a profitable business with an impressive dividend streak, which might compel some investors to buy shares.

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