Best Stock to Buy Right Now: Costco vs. Disney

Key Points

• Despite numerous macro headwinds, Costco’s net sales are substantially higher than before the pandemic.

• Disney is already a dominant force in the streaming world, and its theme parks are a major moneymaker.

• Valuation is the deciding factor when choosing the best stock to buy.

• These 10 stocks could mint the next wave of millionaires ›

Investors can jump-start their research process by identifying companies they might be customers of. For example, you might shop at a Costco (NASDAQ: COST) for groceries and other merchandise. You might watch content from Walt Disney (NYSE: DIS) or plan a trip to one of its parks. Thinking like a customer can provide firsthand knowledge that is valuable in the decision-making process.

These two consumer-facing businesses each possess their own investment merits. But which one is the best stock to buy right now?

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Costco: Dominating retail, but at an expensive valuation

Costco's financial performance in recent years highlights its steady and dependable nature. Between fiscal 2019 and fiscal 2024 (ended Sept. 1), the company's net sales increased at a compound annual rate of 10.8%. This time frame included the COVID-19 pandemic, supply chain issues, surging inflation, rising interest rates, changing trade policies, and today's general economic uncertainty. Same-store sales gains have continued into this year.

With Q3 2025 (ended May 11) net sales of $62 billion, Costco is the third-biggest retailer in the world. But compared to its peers, which sell a massive number of different goods, each of this company's warehouses on average carries about 4,000 stock-keeping units. As a result, Costco has a major cost advantage, flexing its negotiating power with its suppliers to obtain favorable pricing.

Those cost savings go to shoppers in the form of constantly low prices. These customers are then inclined to spend more money at Costco. This further reinforces the company's cost advantage.

If the compelling shopping experience wasn't enough to entice customers, Costco's membership model does. On a global level, these had a 90.2% renewal rate in the third quarter. They drive loyalty and repeat visits, while bringing in a high-margin revenue stream.

Costco is a fine business. And the investment community knows it, bidding up the valuation to incredible heights. Shares trade at a price-to-earnings (P/E) ratio of 53.9. In the past 25 years, Costco's valuation has rarely been more expensive. Investors must consider these lofty expectations embedded in the stock price.

Disney: Putting streaming at the forefront

Disney is undoubtedly a leader in the media and entertainment landscape. But its cable networks are in secular decline. Revenue in this segment fell 15% year over year in Q3 (ended June 28), as operating profit dropped 28%. As households continue to ditch their cable subscriptions, there will be pressure here.

However, Disney has been successful in positioning the business for a streaming future. It launched Disney+ in November 2019. Combined with Hulu, the company's direct-to-consumer streaming operations have 183 million subscribers (this excludes ESPN), up 1% from three months prior. This drove a 6% year-over-year revenue gain.

The business just launched its highly anticipated flagship ESPN streaming service, which provides sports fans with a more comprehensive offering with interactive and personalized features. "The enhanced ESPN App will be a sports fan's dream," CEO Bob Iger said.

Disney's most lucrative segment, though, is Experiences. This includes the theme parks, cruise lines, and consumer products. In Q3, it posted a 27.7% operating margin. Management believes there are 700 million people across the globe with "high Disney affinity" that haven't visited a park yet.

Given this estimate, it makes sense that Disney is investing aggressively to add new attractions at its parks, while expanding its cruise fleet. This should allow the company to serve more customers in the future, which could then benefit the media segments by attracting more subscribers.

Investors can buy Disney shares at a P/E multiple of 18.5. While the company is certainly more cyclical than Costco, I believe the House of Mouse is the best stock to buy of these two options. Over the next five years, Disney has greater upside than the extremely expensive Costco shares.

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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale and Walt Disney. The Motley Fool has a disclosure policy.