After Costco's Surge, Here Are the 3 Best S&P 500 Stocks to Buy Now

The market is rewarding defensiveness, but the more interesting signal is that investors are still paying up for certainty while selectively ignoring operating leverage. KO, DG, and TJX are not just “safer” alternatives to COST; they each monetize different forms of resilience — pricing power, localized necessity spending, and opportunistic inventory sourcing — which should matter more if consumer growth slows unevenly rather than collapsing outright. That makes this a relative-value rotation within consumer staples/discretionary, not a broad buy-the-sector call.

The second-order winner may be vendors and landlords tied to value retail, not the retailers themselves. If DG keeps remodeling and adding non-consumables, it can pull share from regional grocers, independents, and lower-income e-commerce baskets, while TJX’s off-price model can pressure mid-tier apparel chains by keeping liquidation channels efficient and discount expectations high. KO’s margin mix shift also implies continued low capital intensity, which should preserve buyback/dividend capacity even if volume growth is modest.

The biggest risk is that these “defensive” names are already crowded trades. If rates back up or the macro backdrop stabilizes, the market may rotate out of high-multiple defensives faster than fundamentals deteriorate, compressing multiples before earnings catch up. For COST specifically, the issue is not business quality but duration risk: at this multiple, even a small disappointment in comp traffic or renewal cadence can drive outsized de-rating over the next 1-3 quarters.

Consensus may be underestimating how much of the upside is now in expectations rather than operations. KO has the cleanest near-term setup because guidance supports earnings acceleration without requiring aggressive revenue upside, while DG is more of a multi-quarter repair story with idiosyncratic execution risk. TJX looks best if consumer stress persists; if spending re-accelerates, its relative outperformance could narrow because its scarcity/discount appeal is less differentiated in a healthier retail tape.