Costco Wholesale Corporation (NASDAQ: COST) has been the retail growth story that is the envy of every retailer. In many ways, Costco has seen an investor trajectory similar to what Walmart Inc. (NYSE: WMT) saw in the 1990s. If Costco is up 37% year-to-date versus a 53% gain for Walmart, then Costco has to have better upside (right?). Maybe not.

The team at Truist Securities has downgraded Costco’s rating to Hold from Buy while keeping its $873 price target. Costco has already passed that price and was above $900 on last look. Truist also raised Walmart Inc. to Buy from Hold and raised its price target to $89 from $76.

Tactical Bulls always reminds its readers and all investors that no single analyst report should ever be used as the sole reason to buy or sell a stock. The decision to buy, sell or hold needs to be made by each investor along with their financial advisor. That said, this is an interesting call as Walmart’s 53% YTD gain is versus the 37% YTD for Costco and versus a 20% gain for the S&P 500.

COSTCO

Truist does note that Costco’s business remains strong and that it is gaining market share versus virtually all trade classes. It is also said to have one of the highest barriers to entry in all of retail, or strongest moats for some.

One problem identified by Truist is changes like the shift towards scanning IDs on entry and also packaging changes to their chickens that might bring some headwinds to its sales ahead. The main fear is that Costco’s key catalysts to buy the stock have now passed. Costco’s stock’s valuation also “leaves little room for error.”

Now Truist is just waiting for a more attractive re-entry point in Costco.

WALMART

The Walmart upgrade to Buy from Hold still implies upside of just over 10%. Truist sees Walmart continuing to gain market share across income levels, which the company had highlighted as bringing in more affluent customers in its recent earnings report. Walmart also has the best offerings when it comes to store prices, convenience and the assortment of goods.

Truist also pointed out that Walmart is increasingly using rapidly growing and higher-margin revenue streams like advertising, membership and its marketplace. This is helping it to expand price gaps, gain market share and also to move its margins higher to an even more profitable company. As such, Truist believes Walmart deserves a valuation that has been higher than its historical multiples.

THE STOCKS

Costco’s current share price of $908.00 is against a 52-week range of $528.22 to $922.83. Its consensus analyst price target (FinViz) is $902.28.

Walmart’s current share price of $80.50 is versus a 52-week range of $49.85 to $81.02 and its consensus analyst price target (FinViz) is $82.66.