3 Evergreen Retail Stocks to Buy Like There's No Tomorrow

Most retailers aren't considered evergreen businesses because they're highly exposed to macro and competitive headwinds. They've also struggled to keep pace with major technological shifts in the e-commerce, mobile, and social media markets.

Nevertheless, some resilient retailers have repeatedly rolled with the punches and evolved through those challenges. I personally believe three of those long-term winners can be classified as "evergreen" stocks that are still worth buying today: Walmart (NYSE: WMT), Amazon (NASDAQ: AMZN), and Costco Wholesale (NASDAQ: COST).

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1. Walmart

Walmart operates more than 10,600 stores and warehouse clubs across the U.S., Mexico, China, and other overseas markets. It also owns other regional brick-and-mortar banners and e-commerce websites across 19 countries.

A decade ago, Walmart was struggling to keep pace with Amazon and other e-commerce challengers. But it stayed relevant by slowing down its brick-and-mortar expansion, renovating its existing stores, building customer relationships, and expanding its e-commerce and mobile platforms. It also matched Amazon's prices and fulfilled more online orders through its own stores.

From fiscal 2014 to 2024 (which ended in January 2024), Walmart increased its revenue at a steady compound annual growth rate (CAGR) of 3% -- even as the pandemic, inflation, and other macro headwinds rattled the global economy. From fiscal 2024 to 2027, analysts expect its revenue and earnings per share (EPS) to rise at CAGRs of 5% and 11%, respectively, as it automates more orders, expands its digital capabilities, and locks more shoppers into its premium Walmart+ subscriptions.

Walmart's stock might not seem cheap at 37 times forward earnings, but its scale, diversification, and forward-thinking strategies support that higher valuation. That makes it an evergreen stock to buy and hold for the next few decades.

2. Amazon

Amazon didn't wipe out Walmart, but it drove many other big box retailers out of business during the "retail apocalypse" over the past 15 years. It's now the world's top e-commerce company with over 200 million Prime members. It also owns Whole Foods Market, offers digital streaming services, and locks in its users with a wide range of Alexa-powered hardware devices.

The e-commerce giant can afford to operate its first- and third-party marketplaces at thin margins because it actually generates most of its profits from its cloud infrastructure platform, Amazon Web Services (AWS).

AWS is already the world's largest cloud platform, and it's growing even larger as more companies upgrade their cloud infrastructure to analyze more data and support the latest AI applications. That higher-margin cloud business usually subsidizes the expansion of Amazon's lower-margin retail businesses with loss-leading strategies to give it a major advantage against other brick-and-mortar retailers.

From 2014 to 2024, Amazon's revenue increased at a CAGR of 22% as it expanded through multiple economic downturns. From 2024 to 2026, analysts expect its revenue and EPS to grow at CAGRs of 10% and 17%, respectively, as the macro environment gradually stabilizes. It still doesn't look too expensive at 36 times forward earnings, and it's a rare evergreen play on the booming e-commerce, cloud, and AI markets.

3. Costco

Costco is another retailer that held its ground against Amazon and Walmart. It locks its shoppers into sticky membership plans for its warehouse club stores, which offer attractive discounts for bulk purchases compared to traditional retailers. It subsidizes its sales of lower-margin products with its higher-margin membership fees.

As long as Costco opens new stores, gains new members, and maintains a high renewal rate, its core business will remain healthy. From fiscal 2014 (which ended in August 2014) to 2024, Costco expanded from 663 warehouses to 891 warehouses, it grew from 76,000 cardholders to 136,800 cardholders, and its global renewal rate grew from 87% to 90.5%. Its total revenue grew at a CAGR of 8% during those 10 years.

From fiscal 2024 to 2027, analysts expect Costco's revenue and EPS to rise at CAGRs of 7% and 10%, respectively, as it continues to expand and lock in more shoppers. It isn't cheap at 52 times next year's earnings, but it will likely grow even larger over the next few decades as its evergreen flywheel keeps spinning in the right direction.

Should you invest $1,000 in Walmart right now?

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Leo Sun has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Costco Wholesale, and Walmart. The Motley Fool has a disclosure policy.