Retail stocks don't always get much love from growth investors as they aren't as exciting as tech companies. But that doesn't mean you can't earn some great returns from them. If you had bought shares of either Costco Wholesale (COST -1.05%) or Lowe's (LOW -0.72%) a decade ago and held on, you would have more than quintupled your money. Here's why they've done so well, and what we can expect from them in the years to come.

1. Costco Wholesale

Although its name contains the word "wholesale," Costco is a retailer whose business thrives in part by inducing its consumers to spend more time and money than they expected at its huge warehouse stores, which seem to always be packed with people regardless of the day or month of the year. That success is evident in the company's long-term growth.

In 10 years, the stock would have turned a $10,000 investment into close to $48,000 today. And when you include its dividends and reinvest them, you're up to around $58,500. It's easy to see why the stock has performed so well when you see its top- and bottom-line growth over the years.

COST Revenue (Annual) Chart
COST Revenue (Annual) data by YCharts.

The company has grown from 634 warehouses in August 2013 to 855 today. It hasn't relied too heavily on opening new locations; that equates to a growth rate of just 35% over close to a decade, or about 3% annualized. That's an average of about 22 new stores per year. Costco is continuing to expand, however, and is opening multiple locations in China this year. It also isn't short of growth opportunities in other international markets, as the bulk of its locations (734) are in North America.

As well as the stock has performed over the past 10 years, Costco's business is financially sound, and it remains a solid investment. Although its valuation is high at 39 times its trailing earnings, that multiple could come down as there's more profit growth on the horizon.

2. Lowe's

Home improvement giant Lowe's is a go-to option for many people who need to work on a home renovation project or who just have small repairs to make around the house. With Lowe's, customers can not only get the tools they need to take on projects but also guidance on how to do so from the company's helpful staff.

This retail stock has been an even better investment than Costco over the past decade -- a $10,000 investment in the company back then now would now be worth $54,600. Add in dividends and dividend reinvestment, and your total would rise to $64,700.

The company's financials got a boost during the last few years due to a hot housing market, the pandemic, and an influx of cash into the economy, all of which led to an increase in spending on home renovations.

LOW Revenue (Annual) Chart
LOW Revenue (Annual) data by YCharts.

The company expects a more challenging year ahead because of inflation, higher interest rates, and slower economic growth. Lowe's now projects that its comparable sales for 2023 will be down by as much as 4%, which is worse than management's earlier forecast for a decline of no more than 2%. 

It may be a bumpy ride for Lowe's, but what makes home improvement retailers good investments is that in the long run, consumers will come back to them, because home repairs and renovations can only be put off for so long. While they may not always be immediately necessary, they often become higher priorities than other discretionary spending.

Without a big catalyst to boost household spending, I'm not confident that Lowe's stock can replicate the returns of the last decade over the next one. However, it can still make a great investment due to its stability, continued growth, and a dividend that at current share prices yields just over 2%.