We are officially into the busiest time on the shopping calendar. The last bit of November to Christmas Day gives retailers a big chunk of their annual sales.

Costco (NASDAQ:COST) delivered another healthy year of sales in fiscal 2024 (Sept. 1 year-end) with revenue up 5% to 249.6 billion,  same-store sales growth of 5.4%, including a 7.0% gain in the Canadian market, and net income of $7.37 billion, 17.1% higher than 2023. 

Most importantly, its membership fees were $4.83 billion in 2024, 5.5% higher than a year ago. They accounted for nearly 66% of the company’s net profit, down from 73% a year earlier. That’s great news because it demonstrates the company’s costs are under control, leading to greater profits from food sales. 

Like a broken record, Costco stock is up 48% year to date through Nov. 27 and 221% over the past five years. There’s no question it’s a long-term winner worth owning.  

However, before you run out and buy some COST stock, consider buying these three ETFs instead. You can have your cake and eat it too. 

Key Points About This Article:

• The Fidelity MSCI Consumer Staples Index ETF (NYSEARCA:FSTA) offers the most Costco (NASDAQ:COST) for the lowest cost. 
• While FSTA is focused on many non-retail stocks, VanEck Retail ETF (NASDAQ:RTH) invests in 25 of the best. 
• Costco is right up against the iShares Global Consumer Staples ETF (NYSEARCA:KXI) 10% cap.

Fidelity MSCI Consumer Staples Index ETF (FSTA)

Costco is the second-highest weighted stock in the Fidelity MSCI Consumer Staples Index ETF (NYSEARCA:FSTA), at 12.30%, behind only Procter & Gamble (NYSE:PG) at 12.39%.

Launched in October 2013, the ETF tracks the performance of the MSCI USA IMI Consumer Staples Index, a collection of U.S. consumer staples stocks. The 25/50 means that no more than 25% can be invested in a single stock, and the stocks with weights of 5% or more can’t exceed 50%.   

There are several reasons to own FSTA besides the fact one-eighth of its $1.19 billion in net assets is invested in the wholesale club’s stock.

First, its management expense ratio of 0.08%, or $8 per $10,000 invested, is lower than any other consumer staples ETF available. Second, the top 10 holdings, of which Costco is an important part, account for 64.6% of the portfolio, leaving less than 35% for the remaining 96 stocks. 

Lastly, while the ETF primarily comprises large-cap stocks—the average market cap of its 106 holdings is $106.51 billion—it also invests 26% in mid-cap stocks and 9% in small caps.

Morningstar gives it a Silver medal and a four-star rating.     

VanEck Retail ETF (RTH)

Costco is the third-highest weighted stock in the VanEck Retail ETF (NASDAQ:RTH) at 8.74%. Only Amazon (NASDAQ:AMZN) and Walmart (NYSE:WMT) are higher. 

Launched in December 2011, the ETF tracks the performance of the MVIS US Listed Retail 25 Index, which includes 25 of the world’s largest retailers, including brick-and-mortar, wholesalers, and online sellers. 

While the weighting is not as high as that of FSTA, it’s an excellent way to gain exposure to the retail industry, which is in its busy season, where many of the names in FSTA are more focused on food and beverage producers. 

Given the small number of holdings in the ETF, the top 10 accounts for nearly 74% of its $235 million in net assets. The average market cap of the 25 holdings is $200.16 billion, three times higher than the consumer cyclical fund category. 

Morningstar gives it a Bronze medal and a five-star rating.     

iShares Global Consumer Staples ETF (KXI)

iShares Global Consumer Staples ETF (NYSEARCA:KXI) is the final of the three ETFs to gain exposure to Costco and other of its consumer staples peers.  

Costco is the highest-weighted stock in the ETF at 9.71%, double Walmart, the second-highest at 4.86. Some of the top 10 names are similar to the Fidelity fund. However, you get international names such as Unilever (NYSE:UL) and Nestlé S.A.

Launched in September 2006, the ETF tracks the performance of the S&P Global 1200 Consumer Staples Sector Capped Index, a collection of global consumer staples stocks. The “capped” refers to the 10% maximum weight on a single stock, and stocks with 5% or more can’t exceed 25% of the portfolio.

From a geographic standpoint, the U.S. is the top holding, accounting for 63.4% of the portfolio, followed by the U.K. at 11.82% and Japan at 5.4%. The top 10 holdings account for 50% of the $726 million in net assets, and the remaining 89 stocks account for the other 50%.

The average market cap of the 99 holdings is $100.03 billion, slightly higher than the consumer defensive fund category average of $85.47 billion. 

Morningstar gives it a Bronze medal and a two-star rating. The two stars are based on past performance, which suggests a reversion to the mean could deliver better returns in the future.  

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