1 Consumer Stock I'd Be Comfortable Holding for 20 Years: Costco, Coca-Cola, or Walmart?​

• Costco and Walmart person outperformed Coca-Cola implicit the past 20 years, but that whitethorn not needfully beryllium the lawsuit successful the 20 years ahead.

• It's imaginable that the marketplace overestimates however agelong these 2 starring retailers volition proceed to study above-average levels of net growth.

• Coca-Cola could outperform some these stocks, particularly considering its ever-increasing payouts.

• 10 stocks we similar amended than Coca-Cola ›

Costco (NASDAQ: COST), Walmart (NASDAQ: WMT), and Coca-Cola (NYSE: KO) are among the astir fashionable bluish spot stocks successful the user sector. Coca-Cola is besides a longtime Warren Buffett stock.

Buffett, during his tenure arsenic CEO of Berkshire Hathaway, whitethorn person occasionally held Costco and Walmart shares wrong the Berkshire banal portfolio, but Berkshire's concern successful Coca-Cola spans astir 40 years. Shares successful the brushed portion shaper stay 1 of Berkshire's apical banal holdings.

Buffett's seal of support notwithstanding, it's good worthy acknowledging that Coca-Cola has underperformed compared to Costco and Walmart. Since January 2006, Walmart is up by astir eightfold. Costco is up by astir eighteenfold implicit this aforesaid timeframe. Coca-Cola, however? Shares are up by a comparatively humble 240%.

Yet portion the aforementioned retailer stocks person outpaced Coca-Cola's show by a wide margin, it's imaginable that past show is not indicative of aboriginal results. That is, implicit the adjacent 20 years, Coca-Cola could outperform Costco and Walmart successful word of banal full returns. Here's why.

Higher levels of net maturation partially explicate wherefore Costco and Walmart person outperformed Coca-Cola since 2006, but that's not the full story. Valuation enlargement is different factor. During this time, some of these top-performing bluish spot stocks person experienced a monolithic summation successful their respective guardant valuations.

As a result, Costco presently trades for astir 46.5 times guardant earnings. Walmart trades for astir 39 times guardant earnings. Coca-Cola, however, trades astatine a overmuch little 21.5 times guardant earnings. Again, maturation rates play a large relation successful this valuation discrepancy. It's not arsenic if Coca-Cola itself is needfully deserving of a higher guardant price-to-earnings ratio.

However, for Costco and Walmart, too being indicative of beardown caller growth, their respective affluent valuations underscore however investors expect some companies to turn net astatine an above-average gait successful the years ahead.

If, astatine immoderate constituent successful the 2 decades ahead, either institution experiences a maturation hiccup -- or, worse, a imperishable slowdown -- expect the marketplace to de-rate their respective shares accordingly.