By Teresa Rivas

Analysts love packaging hot stocks in snappy names. The Magnificent Seven tech stocks have more than doubled since 2023's second quarter. The Mag 7's predecessor, FAANG, delivered more than 27% annualized returns in the past decade.

Now we have COW, an acronym that UBS analyst Michael Lasser coined for a trio of powerful retail brands: Costco Wholesale, O'Reilly Automotive, and Walmart. "During times of uncertainty, we think owning the stocks of best-in-class retailers could provide a measure of safety," he writes.

Retail stocks as a group are down some 3% in 2025. But Lasser believes that disruptive periods -- like now -- allow some retailers to emerge stronger than peers. Costco is a value winner with great customer loyalty. O'Reilly's supply chain is unrivaled, getting parts to mechanics in as little as 20 minutes. And Walmart is a behemoth, with a commanding grocery business, growing online presence, and reputation for low prices.

Like tech, COW stocks don't come cheap. "We believe predictability and visibility into earnings growth is what in part distinguish winners from the rest," Lasser writes. "Ultimately, an earnings multiple is a reflection of trust." In the past five years, Walmart shares, which recently traded at a 41 price/earnings ratio, have surged 141%, while O'Reilly (33) and Costco (56.5) are up some 230% -- crushing S&P 500 index gains of about 90%.

Write to Teresa Rivas teresa.rivas@barrons.com

Last Week

Markets

Monday saw trade talks beginning in London focused on the U.S. easing chip bans in exchange for China loosening rare-earth mineral restrictions. Stocks rose. Late on Tuesday, the two sides tentatively agreed to a framework to restore the trade truce and keep talking. Inflation ticked up 0.1% in May, below expectations, and yields fell on a round of Treasury auctions. Stocks rose again. But oil spiked following Israel's attack on Iran and its nuclear facilities; gold, the dollar, and Swiss franc also rose. Stocks tumbled on Friday. On the week, the Dow industrials retreated 1.3%; the S&P 500, 0.4%; and the Nasdaq Composite, 0.6%.

Companies

Apple made announcements about software and services at its developers conference, but downplayed artificial intelligence. Health and Human Services chief Robert F. Kennedy Jr., fired all 17 members of the vaccine advisory board. Blackstone said it would invest as much as $500 billion in Europe over the next 10 years. An Air India Boeing 787 crashed in India, killing over 250.

Deals

Warner Bros. Discovery said it would split next year into a streaming and studio company and a cable business... Qualcomm agreed to buy London chip designer Alphawave IP for $2.4 billion, a 96% premium... Meta Platforms agreed to pay $14.3 billion in cash for 49% of ScaleAI...The Wall Street Journal said satellite-and-wireless company EchoStar is preparing for bankruptcy...Rooftop solar company Sunnova Energy International filed for Chapter 11.

Next Week

Tuesday 6/17

The Census Bureau reports retail and food services sales for May. Economists forecast a 0.6% month-over-month decline, following a 0.1% rise in April. Excluding autos, retail sales are expected to increase 0.2%, one-tenth of a percentage point more than previously.

Wednesday 6/18

The Federal Open Market Committee announces its monetary-policy decision. The FOMC is expected to leave the federal-funds rate unchanged at 4.25% to 4.50%. The central bank will also release its quarterly Summary of Economic Projections. Of greater interest on Wall Street is Federal Reserve Chairman Jerome Powell's news conference. Powell has been in wait-and-see mode since the implementation of the White House's tariff policy, stating that the FOMC didn't need to be in a hurry to adjust interest rates and was well positioned to respond once there was more clarity through the incoming data. With this past week's benign inflation prints and small cracks in the labor market -- initial jobless claims have averaged 240,250 over the past four weeks, up 27,750 since the beginning of year -- investors will be keen to hear whether Powell changes his tune.

Thursday 6/19

Equity and fixed-income markets are closed in observance of Juneteenth National Independence Day.

The Numbers

34.5%

Decline in Chinese exports to the U.S. in May year over year in dollar terms, following a 21% fall in April.

$65 B

How much Mark Zuckerberg says Meta Platforms could spend on artificial intelligence this year.

3.5 M

The number of Switch 2 videogame units that Nintendo sold within the first four days of launch.

20%

Percentage of total foreign reserves in gold at the end of 2024, second to the dollar at 46%. The euro was at 16%.

Write to Robert Teitelman bob.teitelman@dowjones.com

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June 13, 2025 20:52 ET (00:52 GMT)

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