Timing is everything when pitting one stock against another. A year ago a battle between Walt Disney (NYSE:DIS) and Costco (NASDAQ:COST) for a spot in your portfolio would've been a juicy matchup. Two iconic brands with slow, yet steady, organic growth for their expanding empires? A ringside seat, please! 

It's not a fair bout these days. The two fighters are going in different directions in light of the pandemic. Costco keeps growing, and in many ways the COVID-19 challenge has been an opportunity to cement its standing as an essential retailer. Disney is sliding back as its key businesses get slammed. Did you ever think we would see a 42% decline in quarterly revenue at Disney like we did earlier this month? 

Neither investment has been a magnet for yield chasers given their historically low payouts, but even on that front Disney and Costco are passing ships. Costco increased its quarterly dividend earlier this year. Disney has temporarily suspended its distributions until it gets through this coronavirus crisis. It's clear which company is in better shape right now, but this contest is all about which one will win in the future. Let's size up Costco and Disney to see which stock is the better buy at current levels.

Alice in Wonderland with Mad Hatter and Rabbit in front of the Mad Tea Party ride at Disney World.

Image source: Walt Disney.

Pallet jack

Costco has been resilient through the pandemic, and understandably so, with folks stocking up on goods at the warehouse club chain. Costco's 790 superstores never closed during the shelter-in-place phase of the pandemic. 

Comps did clock in with a rare decline in April -- its first negative month in more than a decade -- but that was with many of its departments, including its food court, travel center, eye care, and photofinishing services, closed through the first few weeks of the disruption. We also can't forget that Costco sells gas, a commodity that wasn't very popular in the springtime with folks staying at home. Stateside comps would have actually been flat in April if you back out just the gasoline sales. 

The recovery was swift, with comps rising 9.7% in May, 11.1% in June, and 13.2% in July. This is a welcome trend of acceleration, and it will reflect nicely when Costco reports its fiscal fourth-quarter results next month. 

Mouse trap

There isn't a lot of pixie dust in Disney's media empire these days. Its original Disneyland theme park has been closed for five months, and its gated attractions that have opened in Florida and overseas are currently not profitable given guest count restrictions and the tattered tourism industry. Movie theaters remain closed, drying up another historically potent revenue outlet for the company that had all six of the country's highest-grossing box office winners last year. 

Disney's media networks segment has held up well with folks spending more time watching TV from home, and that has also opened up the door for the stellar ascent of Disney+ since launching just nine months ago. 

The good news for Disney shareholders is that it's still the undisputed top dog in entertainment. It has an unmatched arsenal of intellectual property, explaining why Disney+ has topped 60 million subscribers in less than a year -- four years ahead of its earlier projection. When folks are ready to travel they will go to Disney theme parks. When folks are ready to head out to the corner multiplex they will be seeing Disney theatrical releases. The problem here is that the timetable isn't clear. Disney is at the mercy of external forces it can't control. 

I am bullish on Disney and Costco for the long haul, and that's not just lip service. I am a shareholder of both companies. However, this one is a fairly easy call, especially with Disney stock already bouncing back to where it's now just 15% from last year's all-time high despite all of its current uncertainties. We're pitting consumer staples against consumer discretionary bellwethers, and until some of the gray clouds clear at Disney the better buy will be Costco.