Investors are excited about the potential for the warehouse retailing niche today. That segment delivers steadier sales and earnings growth than more traditional peers thanks to a steady stream of membership income. It can win market share during inflationary times, too, as shoppers become more focused on values.

But which of the bulk shopping giants should you add to your portfolio? Here, we'll stack two attractive options, Costco (COST -0.09%) and BJ's Wholesale Club (BJ 1.48%), as potential candidates. Read on for good reasons to add one, or both, of these retail winners to your watch list.

Winning approaches

Both stocks are benefiting from the membership retailing model. BJ's revealed in its most recent earnings report that comparable-store sales were up 8% after accounting for gasoline price swings, on top of big gains a year ago. Costco is similarly winning market share, with growth coming in a bit faster at 11% through late July.

These metrics help explain why the warehouse retailing segment is so attractive for long-term investors. During boom times, companies like Costco grow along with the wider market.

And when consumers become more price sensitive, like they are today, sales continue expanding just the same. "Our business model is designed to work well in the current consumer environment where value is king," BJ's CEO Bob Eddy said in mid-August. If market-leading sales growth is your goal, both Costco and BJ's will satisfy that requirement.

Earnings outlook

Costco's stock has the edge when it comes to the earnings outlook. Sure, BJ's operating profit margin recently surpassed Costco's 3.5% rate. However, Costco likely has more room to expand profitability over time, mainly by raising annual membership fees. Most of its earnings come from subscriber fees, which tend to go up roughly every five years.

Costco is due for another boost in the next year or so, meaning shareholders won't have to wait long to see accelerated gains. Meanwhile, the chain's clear value to shoppers, reflected in the fact that over 90% of members renew their subscriptions each year, implies that any price hike will be well received.

What's the better value?

BJ's is arguably the better value. The stock is valued at about half of Costco's price-to-sales ratio, even though growth and profitability are similar. Sure, Costco deserves a premium for its far larger selling footprint, and for its longer track record of generating phenomenal growth over the last several decades.

BJ PS Ratio Chart

BJ PS Ratio data by YCharts

However, BJ's also has a long runway ahead as it expands outside its mostly regional focus in the eastern United States. The earnings spike that the retailer has seen through the pandemic, combined with enduring customer traffic gains, provides plenty of flexibility for management to be aggressive in that expansion strategy.

Add in the fact that you can own BJ's stock for a big discount compared to the industry leader, and you might want to consider buying shares of this stock. Both companies will likely perform well over the next several years, but BJ's has a bit more room to expand its valuation and deliver better returns, as the business matures.