Sustainable Success Stories: 2 U.S. Companies With a Legacy of Growth

Globe and Mail

18-05-2025

Given all the uncertainty over tariffs and the trade war with China, following Warren Buffett's advice from his 2008 op-ed in The New York Times to buy American stocks seems more relevant than ever.
Here's a look at two competitively strong U.S.-based companies with a long history of delivering market-beating returns to investors. These businesses are as American as they come, each headquartered and generating a high percentage of their revenue in the U.S.
1. Costco Wholesale
There are so many large U.S.-based companies with global operations that it's difficult to find one that's still grounded in serving American consumers. Costco Wholesale (NASDAQ: COST) is gradually expanding into other countries, but it still generates more than 70% of its revenue from the U.S. market.
Its formula of keeping costs down and passing the savings on to its members continues to drive solid growth for the business. Comparable sales grew 6.8% year over year in the most recent quarter. Plus, Costco continues to show strong growth potential in e-commerce, with online sales up nearly 21% over the year-ago quarter.
Importantly, Costco should experience a relatively low effect from tariffs. About a third of its sales in the U.S. are of imported goods, and less than half of those are imported from China, Mexico, and Canada. Analysts currently expect Costco's earnings per share to increase 9% to $18.11 for fiscal 2025, according to Yahoo! Finance, which seems to reflect Costco's ability to absorb higher costs from tariffs.
Costco excels at negotiating better deals with suppliers to deliver great savings to its warehouse members. Management indicated on the last earnings call that its sourcing teams will treat tariffs like any other cost in the business, where selling goods at razor-thin margins is what it does best.
The greater challenge for investors who are thinking about buying the stock is valuation. Costco stock has tripled over the last five years, but that has stretched its earnings multiple to historically high levels. The shares currently trade at 58 times earnings -- the highest price-to-earnings ratio in the stock's trading history. The risk of paying a high valuation is that it could lead to a pullback in the share price at some point.
Still, if you're interested in buying shares of U.S.-based companies, Costco is about as American as it gets among prominent businesses. Given the stock's high valuation, the best way to invest in Costco is to dollar-cost average, where you start small and gradually buy more shares over time.
2. Fastenal
Fastenal (NASDAQ: FAST) is an outstanding business headquartered in Winona, Minnesota. It's a leading distributor of construction supplies, including safety equipment, tools, and, of course, fasteners. The stock has delivered market-beating returns for investors over the past few decades, yet the business still has a massive growth opportunity.
A $10,000 investment in the stock's initial public offering in 1987 would be worth nearly $13 million today, not counting dividends. But you shouldn't think it's too late to buy it, since a $10,000 investment in 2020 would have already doubled to more than $20,000.
It keeps delivering market-beating returns because Fastenal's opportunity is that large. It generates only $7.6 billion in annual revenue, but is serving a North American industrial distribution market that is valued at $200 billion.
Fastenal generates 83% of its revenue in the U.S. However, it could feel a sting in the near term, depending on the tariff situation. It sells products that are manufactured and imported from overseas, which could pressure its financial results in the near term. Fastenal has been diversifying its supply chain in recent years, but management has limited visibility into the effect that tariffs may have on near-term demand for industrial supplies.
That said, Fastenal has successfully navigated several recessions before and has continued to deliver excellent returns to investors. It has such a large opportunity that it could potentially see stable sales in a recession as it continues to gain share of its addressable market over competitors. For what it's worth, Wall Street analysts expect full-year sales to be up about 7%, with earnings up 8.5%.
Analysts expect the company's earnings to grow at an annualized rate of 10% over the long term. But those estimates could be conservative. The company has made significant investments to expand its digital business in recent years. It also benefits from an extensive network of on-site locations where its customers are, so Fastenal could see accelerating growth in a stronger economy when there is elevated construction activity.
Should you invest $1,000 in Costco Wholesale right now?
Before you buy stock in Costco Wholesale, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Costco Wholesale wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $642,582!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $829,879!*
Now, it's worth noting Stock Advisor 's total average return is975% — a market-crushing outperformance compared to172%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor.
See the 10 stocks »
*Stock Advisor returns as of May 12, 2025