My 2 Favorite Stocks to Buy Right Now

Whether you own a couple or dozens of stocks, it's OK to play favorites. There's no shame in dedicating more time to the workhorses in your portfolio. You're probably not going to exert the same effort on every financial update for the stocks you own.

Some of my favorite stocks right now include Costco Wholesale (NASDAQ: COST) and Roku (NASDAQ: ROKU). They're two of my largest holdings, but also companies that I think can beat the market over the next few years.

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1. Costco

There are warehouse clubs, and then there's Costco. If you didn't know the company, you would be baffled by the gall of a retailer that charges $65 a year for the right to shop there. You would also be shocked to learn that there are 81.5 million members. The cherry on top is that nearly half of them are paying twice as much for the higher-tier Executive membership that comes with a few extra perks. The cherry on the cherry on top is that a whopping 90% to 92% of members renew their memberships at the end of the year.

Customers pay up for Costco memberships because they know they're ultimately saving money. The retailer cuts costs -- without sacrificing its employees, given the workforce's healthy retention rate -- and offers marginal markups on a wide range of essentials in bulk. Those membership fees, which accounted for less than 2% of Costco's total revenue, were roughly two-thirds of fiscal 2025's profit.

Costco stock is as close as you can get to being recession-proof when it comes to retail stocks. It has posted positive top-line growth in 33 of the past 34 fiscal years. Its lone down year -- during the recession-rattled fiscal 2009 -- was a mere 1.5% revenue decline.

It's also an income provider. The 0.5% dividend yield is modest, but Costco has delivered 20 straight years of payout increases. The lion's share of your potential return will come from capital appreciation, explaining why the yield is so low despite two decades of dividend boosts.

Those upticks add up. Costco has more than doubled over the past three years. It has nearly tripled during the past five years.

But the stock isn't cheap. It's trading for 48 times forward earnings. You'll never get the class act of warehouse clubs at a market discount, but its current multiple is still higher than its historical median of closer to 37.

2. Roku

Roku is another stock I own that has doubled over the past three years, but its five-year stock chart isn't pretty. Roku operates North America's most popular platform for serving up streaming services through your TV. It's a free operating system, and Roku hardly breaks even on the hardware. The model relies largely on ad revenue generated by promoting the thousands of apps on its hub.

Still, growth hasn't been a problem. It has posted double-digit top-line growth consistently in each of the past 10 years. The bottom line has been spotty, but Roku turned profitable a couple of quarters ago.

If you believe in streaming service stocks, Roku is a great way to play the entire market. Roku had 89.8 million households on its platform at the beginning of last year, and the average user was spending more than four hours a day cradling the Roku remote. Roku stopped providing those metrics last year, but revenue and the hours streaming on its platform have risen in the low double digits over the past year. In other words, engagement and audience growth continue to happen.

If you thought Costco had a lofty multiple, this one may leave you buffering. Wall Street pros see Roku's revenue rising 14% to $5.3 billion this year, with adjusted earnings quadrupling to $1.31 a share. That translates into a forward P/E ratio of 82. That's steep, but analysts believe its net income can double again next year.

Roku is in a good groove. It was generating generous free cash flow even before its profitable turn, and now we're seeing the bottom-line benefits of its explosive scalability. It's expanding its homegrown streaming offerings and products. It recently landed a landmark deal with ad tech titan Amazon that should take its monetization to an even higher level.

With profit targets moving higher in recent months -- and Roku beating profit targets by at least 25% in each of its past four quarters -- next month's quarterly update could be interesting. Another blowout beat by Roku could send the shares even higher in February.

Rick Munarriz has positions in Costco Wholesale and Roku. The Motley Fool has positions in and recommends Amazon, Costco Wholesale, and Roku. The Motley Fool has a disclosure policy.